New output to help Gulf of Mexico oil production avoid slump

Production from new oil fields in the Gulf of Mexico will help the region avoid a decline in production due to natural depletion this year and next. The news comes from the Energy Information Administration, which said earlier this year that oil production could reach 1.8 million barrels per day.

To be fair, 1.8 million bpd is around the current daily average for the Gulf of Mexico, but without the new discoveries, it looks like production would have fallen as soon as this year. These new fields would also help push GOM crude production to 1.9 million barrels per day in 2025.

In the case of natural gas, however, the effect of new discoveries will not be conducive to an increase in production, the EIA said. Natural gas production from the region in 2024 is 1.8 billion cubic meters per day this year, remaining unchanged in 2025.

New discoveries in the Gulf of Mexico are not as frequent as they were in the early days of the offshore industry, but they are still being made. Among the latest developments in this regard was a deep oil discovery that Occidental Petroleum made near an already producing field and another, announced by Talos Energy earlier this month, production from that field is estimated to start in 2026. Meanwhile, Chevron and TotalEnergies started production at the Anchor field in August, with peak output seen at 75,000 barrels per day.

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The Gulf of Mexico has been a battleground for the US oil industry and the federal government since 2020, as the latter has pushed to limit new exploration under its climate policies and the former has argued that doing so would compromise energy self-sufficiency and, as such. , security.

“Imagine if a president blocked the development of farmland, disrupting our domestic food supply and making us more dependent on foreign countries to feed our families,” American Petroleum Institute President Mike Sommers said at an event in industry earlier this year.

“American voters are watching. And as Americans head to the polls later this year, energy is very much on the ballot — and so is everything that touches energy: jobs, America’s security, manufacturing, inflation,” he added at January issue of the magazine. The State of American Energy.

The comments were a reaction to a decision by the Biden administration to limit the amount of new exploration space in the Gulf. Last October, the federal government published its new five-year plan for the region, showing the lowest number of lease sales in the industry’s history at just three. It was a natural extension of President Biden’s moratorium on new oil and gas drilling on federal lands, which he signed in his first week in office and which was later overturned by a federal judge.

Yet again it was the Biden administration that gave the green light to Alaska’s Willow oil project despite opposition from climate change activists, who were also unhappy with the lease sale plan as they insisted that any new exploration in the Gulf of Mexico is halted. .

Amid the battle between activists and a federal government walking a tightrope between energy security and transition ambitions, explorers continued to explore and strike oil. In 2023, oil and gas companies operating in the area announced eight new discoveries in the deep section of the Gulf. These included Murphy Oil’s Longclaw-1 discovery and Hess Corp.’s Pickerel-1 well, the latter of which began production this year.

Talos Energy struck oil in six of its exploration wells in the Gulf last year, and the results were so encouraging that the company combined organic growth with mergers and acquisitions, acquiring QuarterNorth Energy for $1.29 billion. The target company has several fields in the deep waters of the Gulf.

It appears that despite the government’s offensive against the oil and gas industry in the Gulf of Mexico, energy security is, for now, trumping transition concerns. It is also just as well in the context of natural depletion which, together with hostile government policies, is decimating North Sea oil and gas production.

By Irina Slav for Oilprice.com

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