Deepwater E&P activity driving Gulf of Mexico revivalNews // October 4, 2012
The Deepwater sector of the Gulf of Mexico is experiencing a strong resurgence in exploration and production (E&P) activity and is well on its way towards reaching a “new equilibrium” in 2013, according to Wood Mackenzie’s latest upstream outlook.
Exploration success in the deepwater Gulf of Mexico over the 10 years preceding the Macondo incident built a momentum that has been slowed, but not diminished in the two years succeeding it. Wood Mackenzie’s outlook underscores that the region is being defined by a high level of investment, a wide range of opportunities and the large number of explorers.
“The moratorium and exodus of several mobile offshore drilling units from deepwater Gulf of Mexico in 2010 sharply hindered drilling activity through 2011, but it has rebounded very well in 2012,” explained Lauren Payne, Gulf of Mexico analyst for Upstream Research at Wood Mackenzie.
“We expect this trend to continue, driven primarily by development drilling as operators seek to boost production levels and bring new projects onstream.”
Wood Mackenzie emphasizes that more than US$20 billion will be spent drilling development wells for onstream projects alone through 2015.
Subsea and facility spend will become bigger drivers as new projects like Jack/St Malo and Hadrian move forward in development.
Together, these two categories represent US$27 billion spent through 2015.
“Production has suffered in part because the low drilling levels in 2010/2011 could not mitigate natural decline, but we expect regional production to exceed 2009’s peak in 2018/2019 at 2 mmboe/d,” said Payne.
For explorers, the deepwater Gulf of Mexico remains an attractive region and Wood Mackenzie expects it to remain a vibrant hub of activity in the long term.
“We expect more than US$70 billion to be spent on exploration in the region by 2030, more than all the other key deepwater provinces combined,” said Julie Wilson, Senior Analyst for Wood Mackenzie’s Exploration Service.
From that investment, Wood Mackenzie expects over 12 billion boe to found by 2030, creating around US$30 billion of value.
“These results are materially surpassed only by Brazil, which has enormous potential in its pre-salt play,” Wilson said.