The Gulf of Mexico is expected to remain one of the most prolific natural gas supply regions over the next two decades, with production levels projected to rise by nearly 30% to 6.4 Tcf in 2010, and by more than 40% to 7.2 Tcf in 2020, according to an INGAA Foundation-commissioned study that was forwarded to Senate Energy Committee Chairman Jeff Bingaman (D-NM) last week.

“Because the Senate said ‘no’ on ANWR, I wanted to get the study over [to them] and show there’s quite a lot of activity in the Gulf,” said Jerald Halvorsen, president of the Interstate Natural Gas Association of America (INGAA). With drilling in the Arctic Natural Wildlife Refuge (ANWR) apparently off the table, this “swings the focus to the Gulf” now, he noted.

Interstate pipeline companies and producers will need to spend up to $7.8 billion over the next two decades to expand the existing 14,554-mile pipeline network in the Gulf region to bring these supplies onshore to processing plants, market hubs and downstream pipeline interconnections, according to the INGAA study, entitled “Gulf of Mexico: Natural Gas Resources and Pipeline Infrastructure 2001.” It noted that 1,327 miles of new pipe already have been planned, primarily by producers, at a total cost of $1.1 billion.

An estimated 31% of the proposed pipeline capacity will be located in the Central Louisiana offshore region; 29% in Eastern Louisiana waters; 21% in Western Louisiana waters; 12% in offshore Texas; and 7% in the Eastern Gulf. Major and independent producers are expected to own the bulk of the new facilities.

The development opportunities in the Gulf are “abundant,” based on the number of non-producing leases in the region, the study said. “Currently, there are 7,564 outstanding leases. The majority (73%) of these leases are not producing, which indicates that substantial exploration and development opportunities exist.”

The deepwater areas of the Gulf have the “highest proportion” of non-producing leases, making the production potential “quite high” compared to the other more mature areas, according to INGAA. “The current deepwater production is 20% of the total, up from about 10% in 1997. This figure could reach more than 60 to 65%, based on the location of the potential resource base estimates.”

The INGAA Foundation study cited the Eastern Gulf and subsalt trend development as two other key areas. “Eastern Gulf resource discoveries are particularly significant in the Mobile Bay area, which contains the Norphlet trend, with 7 to 8 Tcf of potentially recoverable reserves,” it noted. “The subsalt trend offers substantial promise in light of recent drilling successes, particularly the Mahogany project being developed by Phillips, Anadarko and Amoco in the Ship Shoal area.”

Producing and lease holdings in the Gulf “are not overly concentrated” within the hands of a few producers, the study said, but it noted that the combined market share of the 10 largest producers in the region was above the U.S. average for producers. The 10 producers hold an estimated 46% of the total producing leases in the Gulf, according to INGAA.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.