Oil production in the Gulf of Mexico is expected to increase to record high levels in 2017, even as prices remain low.
New data from the U.S. Energy Information Administration (EIA) projects that Gulf of Mexico production will average 1.63 million bpd in 2016 and 1.79 million bpd in 2017, reaching 1.91 million bpd in December 2017.
Production from the region is expected to account for 18% and 21% of total forecast U.S. crude oil production in 2016 and 2017, respectively.
The EIA noted that although production in the Gulf of Mexico is less sensitive than onshore production in the Lower 48 states to short-term price movements, decreasing profit margins have prompted many Gulf operators to pull back on future deepwater exploration spending, reduce their active rig fleet by scrapping and stacking older rigs, and restructure or delay drilling rig contracts.
The environment of uncertainty has had a chilling effect on new projects in the Gulf, the EIA said, but 14 deepwater projects already underway are expected to produce additional oil.
Eight of those projects started in 2015, four are expected to start this year, and two are scheduled to begin in 2017.
Of the projects to come online last year, all but one (Anadarko’s Lucius field) was developed as a subsea well tied back to existing nearby production facilities. These subsea tiebacks, the EIA notes, allow producers to reduce project costs and start-up times.
The Lucius field employs a type of floating production platform that supports drilling, production, and storage operations known as a truss spar designed to increase stability in harsh conditions.
