As of the most recent data provided by the EIA (October 2010), crude oil production coming from the Gulf of Mexico makes up approximately 29% of total U.S. daily production. We would note that this is a drop from the month of May when the Gulf contributed to 31% of all crude production.
In the U.S. Energy Information Administration's July Short-term Energy Outlook, the EIA projected that the moratorium would result in lost production of approximately 82,000 bbl/d on average during 2011 or a cumulative 30 million barrels.
Given how early in the game it was when the government made these projections, we doubt they fully considered how slowly the permitting process would resume once they rescinded the moratorium. Using average decline rates, taking the slow resumption into account, we believe the average lost production in 2011 will approximate 95,700 bbl/d or 35 million barrels in total.
The chart above illustrates that after the hurricanes of 2004 & 2005, it took several years to regain production crippled by the storms. The years 2009 and 2010 benefit from projects started in the previous six years that resulted in Gulf of Mexico production exceeding the prior peak set early in the decade.
The impact from suppressed drilling in the Gulf of Mexico over the next two years will be mitigated by operators exploiting horizontal drilling for oil in regions like the Bakken and Eagle Ford shale. This boost in the lower 48, along with the anticipated declines in production from the gulf, suggests the percentage of production from offshore sources will drop. We are anticipating that the Gulf of Mexico's annual contribution will drop from 30% to approximately 26% in U.S. supplies over the next two years.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you