NGI The Weekly Gas Market Report / NGI All News Access

Interior Official Sees Dip in Gulf Gas Production in Short Term, Followed by Rebound

Interior Official Sees Dip in Gulf Gas Production in Short Term, Followed by Rebound

Natural gas production in the Gulf of Mexico is expected to decline in the short term as old fields begin to mature and become exhausted, but will rebound beginning in 2008, reaching approximately 13.5 Bcf/d at its peak, said Rebecca Watson, assistant secretary of the Interior for Land and Minerals Management.

Total Gulf natural gas production, which currently stands at about 12 Bcf, will drop off to about 11.5 Bcf/d in 2006 and 11.1 Bcf/d in 2007, according to Interior's first-ever 10-year Production Forecast -- 2004-2013. Gulf production is projected to start to climb back in 2008, reaching 11.7 Bcf/d in that year, 12 Bcf/d in 2009 and 13.5 Bcf in 2013, it said.

On the oil side, Interior estimates that Gulf crude oil production will jump to 2.25 million barrels per day by 2011 from 1.56 million b/d this year. The anticipated upswing will be the result of major BP production projects, such as Atlantis, Mad Dog and Thunder Horse, coming on line, said Chris Oynes, regional director for the Minerals Management Service, Gulf of Mexico OCS Region.

Interior's incentives for both the deep and shallow waters will help boost Gulf oil production by 43% and natural gas production by 13% over the decade, Watson said. That's enough oil to heat an additional 3.5 million homes each winter, she told reporters at a press briefing at the National Press Club in Washington, DC last Monday.

While the greatest oil production in the Gulf is likely to come from the deep-water region, natural gas supplies are expected to come from both the deep-water and shallow-water, deep-gas areas, she said. Watson noted that 38% of 351 tracts bid on in a western Gulf lease sale in August were in water depths of 650 feet (shallow water).

In that sale, "both BP and Shell...bid very heavily on shallow-water blocks because they were going after cheap gas prospects in that shallow water," Oynes said, adding this was an "exciting turn of events."

The Gulf of Mexico supplies more total energy to the United States market than any domestic or foreign supply source, according to Watson. It represents a "significant share of our energy supply."

The agency has estimated that the deep-water Gulf may contain up to 56 billion barrels of oil equivalent that remain to be found, according to Oynes. The deep-water and ultra-deep water areas in the Gulf contribute roughly 1 million b/d of oil, versus 1.5 million b/d for the entire Gulf, he said. Producing projects in the deep-water region have risen by 50% over the past two years, and they are expected to multiply in the coming years.

Ultra-deep water projects (located very far from shore and in extremely deep waters) have become attractive to companies such as Newfield, ExxonMobil, BP and others, Oynes noted.

He said he expects Hurricane Ivan-ravaged production in the Gulf to return to normal levels in about "another five months or so."

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus