New Projects To Buoy US Gulf Short-Term Oil Output

Forecast sees 12% boost in the region’s crude production by the end of 2022.

BP's Argos platform recently arrived in the US Gulf.
SOURCE: Boskalis

The US Energy Information Administration’s (EIA) latest short-term energy outlook is predicting a raft of new projects will increase crude oil production from the US Gulf of Mexico by 200,000 B/D by the end of next year. The forecast sees 13 new projects coming on stream over the next year-and-a-half accounting for about 12% of total Gulf of Mexico oil production.

The Gulf of Mexico accounts for roughly 15% of total US crude production. Last year, US Gulf crude output averaged 1.65 million B/D. Production is forecast to exceed 2020 levels, reaching 1.71 million B/D in 2021 and 1.75 million B/D in 2022. Over the past 2 decades, the highest crude oil production year was 2019 at 1.9 million B/D.

Four of the new projects will likely begin production in 2021 and nine more in 2022, according to Rystad Energy. Shell’s 300-million-barrel Vito find is expected on stream later this year with an estimated peak production of 100,000 BOED. The company’s PowerNap discovery in the Mississippi Canyon area is also due on stream this year, adding another 30,000 BOED to the tally.

Hurricanes are a critical element in the Gulf of Mexico forecast, according to the EIA. The Atlantic hurricane season typically runs from 1 June to 30 November. Although eight new projects started crude oil production in 2020, annual production was lower than 2019 levels because of pandemic-related shut-ins and the most active Atlantic hurricane season on record.

Hurricane Delta shut in 1.6 million barrels of oil production over 2 days in October, the highest peak shut-in of the hurricane season. However, the combined effects of Tropical Storm Marco, followed quickly by Hurricane Laura, led to 15 days of shut-ins, which more than doubled the total shut-in production from Hurricane Delta and resulted in the most shut-ins since 2008. Early indications are that the 2021 season will be above average for the sixth year in a row.

One project that will add volumes during the second half of 2022 is BP’s Mad Dog 2. Argos, the hub platform and centerpiece of the $9-billion project, recently arrived in the US after safely completing its 16,000-mile journey from South Korea to the Kiewit Offshore Services fabrication yard in Ingleside, Texas.

Argos, a semisubmersible floating production platform, will be the company’s fifth operated platform in the Gulf of Mexico—and the first new platform since Thunder Horse began production in 2008. At peak, the facility will produce up to 140,000 BOED through a subsea production system from 14 production wells. It will be connected to and export oil and gas through nearby existing pipeline infrastructure. Reserves recovery will be boosted by injecting 140,000 B/D of processed seawater into the reservoir through water-injection wells.

Post 2022, BP will be adding more volumes from the region via its just revealed Puma West discover in the Green Canyon area. The Block 821 discovery well was drilled to a total depth of 23,530 ft and encountered oil pay in a high-quality Miocene reservoir with fluid properties like productive Miocene reservoirs in the area. According to the operator, preliminary data support the potential for a commercial volume of oil and gas.

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