Natural gas production in the U.S. Gulf of Mexico (GOM) is expected to decline for a fourth straight year in 2023, according to Energy Information Administration (EIA) analysts.
GOM gas output is forecast to average 2.1 Bcf/d in 2023, down 0.1 Bcf/d from the expected total in 2022, said EIA analysts James Easton, Kirby Lawrence and Jim O’Sullivan, citing projections from EIA’s latest Short-Term Energy Outlook.
GOM oil production, meanwhile, is expected to stay basically flat at 1.8 million b/d. In other words, “Declining production from existing GOM fields is greater than the increase in production from new fields for natural gas and is equal for crude oil,” researchers said.
The GOM supplied 15% of all U.S. oil production and 2% of natural gas output in 2021, according to EIA.
Researchers expect nine natural gas and oil fields in the Gulf to come online in 2022. These fields are expected to account for 5% of GOM natural gas output and 14% of its oil production by end-2023, they said.
“In our STEO, we forecast that eight new fields in the GOM will produce both oil and natural gas by year-end, based partly on data from Rystad Energy,” researchers said. “We expect a ninth field, which will produce only crude oil, to start in 2022.”
However, they said, “We expect that the additional capacity will not quite sustain crude oil production at levels similar to the end of 2021. The additional capacity from these new fields will not increase natural gas or crude oil production in the GOM.”
Large offshore projects slated to begin production in 2022 include the BP plc-operated Argos, Murphy Oil Corp.’s King’s Quay, and Shell plc’s Vito.
Each has a peak production capacity of 100,000 boe/d or more, “and each is the result of a focused effort to lower the costs of field developments,” the EIA team said. “Offshore producers have made significant progress simplifying and standardizing floating production systems and collaborating with various partners, including overseas construction services companies, to reduce total costs and remain competitive with onshore producers.”
The authors noted, however, that “fields expected to start in 2022 may shift into our 2023 forecast if their start-up dates are pushed back. In addition, fields expected to start in 2024 could begin earlier, resulting in changes to our initial production forecasts.”
The industry has been urging the Biden administration to swiftly approve a new five-year leasing program for the Outer Continental Shelf in order to maintain production levels in federal waters. The Department of the Interior’s (DOI) Bureau of Ocean Energy Management holds exclusive jurisdiction over leasing in the U.S. offshore.
Interior Secretary Deb Haaland said in May that DOI would release a proposed five-year plan by June 30.
The offshore drilling rig count, meanwhile, stood at 16 as of Friday (June 17), up from 13 a year ago, according to the latest Baker Hughes Co. tally.
EIA researchers noted that most new development in the GOM since the late 1990s has targeted oil-bearing reservoirs.
“Today, most of the natural gas produced in the GOM comes from associated-dissolved natural gas production in oil fields instead of natural gas fields,” they said. “In 2020, gross withdrawals of natural gas in the GOM that came from natural gas wells accounted for less than 30% of total GOM natural gas production, compared with 76% in 1999.”
