Natural gas production in the Gulf of Mexico (GOM), which is likely to hit 8.3 Bcf/d this year, could surpass 9 Bcf/d in 2011 and remain above that level throughout much of the decade if activity in the deepwater continues at a strong pace, the Minerals Management Service (MMS) said in a report released Tuesday.

"GOM gas production is expected to level off at around 8 Bcf/d in the near term...If contributions from industry-announced discoveries and undiscovered resources reach their full potential, GOM gas production could exceed 9 Bcf/d within the forecast period," according to the MMS report, "Gulf of Mexico Oil and Gas Production Forecast: 2007."

The Gulf of Mexico "is one of the largest single sources of oil and gas supply to the U.S. market," said Lars Herbst, the agency's acting regional director for the Gulf of Mexico. "With the continued interest and activity in the deepwater area of the Gulf, we anticipate that oil and gas production will continue to be strong with a large portion of the production coming from the projects in deeper water depths [1,000 feet or more]."

The Interior Department agency said it expects 16 new deepwater projects to begin production by the end of the year. A major contributor to its increased gas production forecast is the anticipated start-up this year of the Independence Hub facility, which would gather natural gas from seven fields in the deepwater Gulf, the MMS said. The hub will have the capacity to handle 1 Bcf/d of production.

Independence Hub, an affiliate of Enterprise Products Partners LP, has entered into agreements with the Atwater Valley Producers Group to gather the deepwater gas from a number of producers. The Atwater Group includes Anadarko Petroleum, Dominion Exploration & Production, Kerr-McGee Oil & Gas, Spinnaker Exploration and Devon Energy Corp.

"The future of deepwater GOM exploration and production remains very promising. Traditional deepwater mini-basins are far from mature, as several recent discoveries attest, and new deepwater plays near and even beyond the Sigsbee Escarpment, beneath thick salt canopies, and in lightly explored lower Tertiary reservoirs show that the deepwater GOM continues to be an expanding frontier," MMS said in a separate report, which also was issued Tuesday.

At the end of last year, the MMS said there were 122 producing projects in the Gulf's deepwater areas, up from 118 producing projects earlier in 2006. Deepwater projects account for 40% of the natural gas produced in the Gulf, the agency noted. It estimated that the deepwater accounts for about 54% of the 7,855 active leases in the Gulf. In comparison, only 27% of the 5,600 active leases in the Gulf in 1992 were in the deepwater, the agency said.

Despite the challenges of deepwater drilling, the number of deepwater discoveries continues to increase, with 12 discoveries added in 2006, according to the MMS report, "Deepwater Gulf of Mexico 2007: Interim Report of 2006 Highlights." Industry-announced discoveries in 2006 are estimated to total more than 1.3 billion boe, it said.

The number of rigs operating in the Gulf deepwater rose slightly to 30 in 2006 from 26 in 2004 and 2005, the agency said. The peak was in 2001, when 41 rigs were operating in the Gulf region.

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