Oil production in the U.S. Gulf of Mexico last August exceeded 2 million b/d for the first time in history, as the once mighty energy region regained some of its swag.
The Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) announced the record figure, which followed on the heels of a record-blasting 2018 for the entire Outer Continental Shelf, when more than 640 million boe was produced in the U.S. offshore.
The production increase last year led to $2.34 billion in royalty revenue for the U.S. Treasury. According to the Short-Term Energy Outlook issued in November by the U.S. Energy Information Administration (EIA), the main U.S. offshore production basket is expected to set records through 2020. EIA estimated oil output would increase by 138,000 b/d in 2019 and by 116,000 b/d in 2020.
“This is incredible news for the nation,” BSEE Director Scott Angelle said. The agency is “stressing safety and environmental sustainability while at the same time promoting robust energy production offshore, and it’s paying off.”
Even with the record-breaking performance, oil output offshore is no match for the Lower 48. In the Permian Basin alone, the EIA said oil production was around 4.69 million b/d in December, with oil output forecast to hit 4.74 million b/d in January.
Federal offshore lease sales in recent years also have not measured up to years’ ago bidding, traced to the plethora of less expensive Lower 48 drilling opportunities. However, there is positive momentum for many offshore global projects, particularly those that are natural gas-rich, in Israel, the Eastern Mediterrean, West Africa and in South America.
Several big U.S. offshore projects also shifted into high gear last year.
The Royal Dutch Shell plc-led Appomattox project about 80 miles south of New Orleans began production last May. The project, with initial production of 175,000 boe/d, was the first commercial discovery to ramp up in the Norphlet formation.
Chevron Corp. in December sanctioned Anchor, which is sited 140 miles offshore Louisiana in Green Canyon. Anchor represents the industry’s first deepwater high-pressure development at 20,000 pounds/square inch (psi) to win a final investment decision.
Chevron subsequently awarded Schlumberger Ltd. 's OneSubsea a contract to provide the industry’s first fully integrated subsea production-rated system to handle up to 20,000 psi.
Transocean Ltd. said Wednesday the offshore drilling market is continuing to improve, providing an increase in contract opportunities for its ultra-deepwater and harsh environment drilling services.
“Customer demand for the highest specification ultra-deepwater floaters now equals or exceeds the number of marketable rigs currently available in many areas,” said CEO Jeremy Thigpen. “As a result, new contracts more consistently reflect materially increased dayrates, which will generate significantly improved cash flow.”
Since its last fleet status report issued in October, Transocean has secured an additional $352.9 million of contract backlog total worldwide from new contracts and from extensions to existing contracts.
In the U.S. offshore alone, Transocean in December secured new contracts for Talos Energy Inc. and Beacon Offshore Energy prospects. It also exercised options to use rigs in domestic waters for Australia’s BHP and Beacon.
BSEE also has several initiatives underway to improve safety and stewardship, Angelle said.
“We changed our compass bearing at BSEE, driving safety performance and environmental stewardship improvements beyond regulations through innovation and collaboration beginning in 2017,” he said.
In the past two years, BSEE has decreased staff by 11.6%, reduced budgetary expenditures by 7.4% and increased mission critical occupations to 47% from 45%.