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US Gulf of Mexico crude production to continue at record highs through 2019

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

US crude oil production in the federal Gulf of Mexico (GOM) increased slightly in 2017, reaching 1.65 million bbl/day, the highest annual level on record. Although briefly hindered by platform outages and pipeline issues in December 2017, oil production in the GOM is expected to continue increasing in 2018 and 2019, based on forecasts in the Energy Information Administration’s (EIA) latest Short-Term Energy Outlook (STEO). EIA expects the GOM to account for 16% of total US crude oil production in each year.

Based on STEO’s expected production levels at new fields and existing fields, annual crude oil production in the GOM will increase to an average of 1.7 million bbl/day in 2018 and 1.8 million bbl/day in 2019. However, uncertainties in oil markets may still affect long-term planning and operations in the GOM, and the timelines of future projects may change accordingly.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

In 2016, producers brought seven new projects and expansions online and ramped up production in 2017, collectively contributing to an average of 126,000 bbl/day of production in 2017. Another two projects came online in 2017, contributing 10,000 bbl/day of new production last year. EIA expects these nine projects to ramp up over the next two years. Producers expect four new projects to come online in 2018 and six more in 2019.

Because of the amount of time needed to discover and develop large offshore projects, oil production in the GOM is less sensitive to short-term oil price movements than onshore production in the Lower 48 states. In 2015 and early 2016, decreasing profit margins and reduced expectations for a quick oil price recovery prompted many GOM operators to pull back on future deepwater exploration spending and to restructure or delay drilling rig contracts, causing average monthly rig counts to decline through 2017.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

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