Projects Expected to Reverse Gulf Declines

Natural gas production in the U.S. Federal Gulf of Mexico (GOM) has been declining for nearly two decades, reports the Energy Information Administration (EIA).

However, 10 new fields are expected to start producing natural gas this year and another eight are to begin producing in 2019, according to information reported to the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement. These new field starts may slow or reverse the long-term decline in GOM production. The projects starting in 2018 and 2019 have a combined natural gas resource estimate of about 836 Bcf.

Marketed natural gas production in the Gulf of Mexico averaged 2.6 Bcfd through August 2018, account- ing for 4% of total U.S. output. In 1997, when EIA began collecting GOM production data, production averaged 14.3 Bcfd, accounting for 26% of total annual marketed natural gas production in the U.S.

The decline in GOM production occurred as the number of producing natural gas wells fell, falling from 3271 in 2001 to 875 in 2017. The technology and expertise required to produce oil and natural gas from the seabed is expensive and specialized, and costs of production platforms can often exceed $1 billion. With the growth in exploration and production activities in shale gas and tight oil formations, onshore drilling became more economic relative to offshore drilling.

Most of the natural gas produced in the GOM is associated-dissolved natural gas produced from oil fields. Although older oil wells in the Gulf tend to have higher natural gas content, newer wells are much more oil rich, resulting in less natural gas per well. According to EIA’s Natural Gas Annual, 59% of gross withdrawals of natural gas in the GOM were from oil wells in 2017, up from 13% in 1997. The 16 new projects in 2018 and 2019 are the first in the GOM since 2016 when initiatives in the Mississippi Canyon and Green Canyon protraction areas added 1429 Bcf of natural gas resources.

(SOURCE: The Weekly Propane Newsletter, December 17, 2018)