There may be light at the end of the tunnel for the U.S. Gulf Coast in this period of severe oilfield-activity downturn, and perhaps from more than one source.
Certainly the recent stabilization of oil prices, coupled with bullish forecasts is likely to bode well for drilling activity and oil-related revenue streams. But for the Western Gulf, from Corpus Christi, Texas, to Mobile, Ala., an announcement from Mexico’s state-run oil company – Petroleos Mexicanos (PEMEX) – on May 20 was just as heartening.
According to Bloomberg, PEMEX is in talks with Exxon Mobil Corp., Total SA and Chevron Corp. on bidding out deepwater leases in the Gulf of Mexico. PEMEX may also start discussions with Oslo-based Statoil ASA. On Dec. 5, 2016, PEMEX will hold the country’s first-ever deepwater auction, and among the fields being offered are ten blocks in the Perdido area near the center of the Gulf.
The importance of this development can hardly be overestimated: If drilling in the Mexican deepwater oilfield starts somewhere around the time that oil prices reach reasonable levels, there is going to be an economic turnaround on the western U.S. Gulf Coast. Shipyards, docks, drilling supply companies, boat operators, all the panoply of high-tech, far-offshore support companies now languishing in the doldrums, will find the winds of recovery freshening.
Why? Because Mexico has no suitable drilling support facilities on its Gulf Coast. The sole port serving the shallow waters of the Bay of Campeche is Ciudad del Carmen, a small, remote, draft-limited port. It is totally unsuitable for the expansion and improvements that would be necessary for it to serve as the main supply port for sophisticated deepwater drilling operations. Yet Port Fourchon in Louisiana, one of the most complete, efficient, and well-established oilfield-supply ports on the U.S. Gulf Coast, is only 230 nautical miles from the nearest Mexican waters, not much farther than from some of the rigs in international waters that it serves today.
Even if Mexico is eventually able to establish a full-service deepwater port, many of the supplies and equipment needed for deepwater drilling will still have to come out of the U.S. Oil service vessels based in Mexican ports will come to U.S. shipyards for maintenance and repair, just as they do today. And the economic impact is likely to be long-lasting. According to Bloomberg, 76% of Mexico’s remaining oil reserves lie in the deepwater areas of the Gulf.
It may be too early for big celebrations along the nearly deserted oilfield docks of the U.S. Gulf Coast, but perhaps a taco meal — and a toast with tequila or cerveza in anticipation of good times to come — might be in order.
The views and opinions expressed in this blog are the author’s and not necessarily those of WorkBoat.