Oil, Gas Execs Say E&P Activity Still Holding Strong in GOM
The question posed to panelists in a session during the Louisiana Energy Conference in New Orleans was simple: will exploration and production activity in the Gulf of Mexico increase in a $50 oil price environment?
Though this “new normal” the oil and gas industry has adopted doesn’t come without its challenges, responses from the panelists were overall in the affirmative.
For starters, the Trump administration has eased up on regulations.
“What we’ve seen with the new administration is certainly more willingness to work with the industry, not just regulate it. Still, we have a long way to go to solidify that relationship,” said Scott Heck, COO of Energy XXI Gulf Coast, Inc.
Loren Long, managing director - Mexico for Talos Energy LLC, a private E&P company based in Houston, noted a difference between the United States and Mexico.
“One thing we can depend on for the U.S. is at least the regulators here have a real familiarity with the industry. On the other hand, in Mexico, what we’ve seen is while they don’t have nearly the expertise with the technical issues [as the U.S. regulators do], they do have enthusiasm and a willingness to truly partner with us,” said Long. “We’ve seen that in Mexico and that’s been really refreshing. We want to see that more on this side of the border as well.”
Heck also believes that by becoming more efficient, the industry will remain operational in the new normal.
“Cost structure in the boat market probably can’t come down, but that’s actually an industry problem. I think the industry can do a lot as far as sharing resources, getting boat utilization up and getting boat efficiencies up … I think there’s a lot of opportunities for the industry to get more efficient,” he said. “But that doesn’t mean cutting cost on an individual commodity. We may have modest increases, but not a lot. We’re going to see a focus on the efficiency side of the business, not the cost side of the business.”
All of the panelists’ companies operate in the Gulf of Mexico, and during a time when offshore activity isn’t as popular as the craze of onshore such as the Permian, operators are still optimistic.
“Investors chase the Permian because of the yield play. Those are getting constrained now and they’re looking for other places they can chase where they can get high yields,” said Steve Weyel, CEO of private EnVen Energy Corporation. “So even as out of favor as the Gulf of Mexico has been, it’s going to give them the yield investors are looking for.”
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.