Gulf of Mexico moves toward a comeback

by Collin Eaton

Polluted by crude, crises and fears of ceaseless political entanglements, the Gulf of Mexico looked endangered as an oil hub after BP’s massive 86-day spill three years ago.

But international oil companies, including BP, are ramping up in the largest U.S. offshore oil and gas region again, drilling some of the largest new fields and jostling for lucrative reserves as oil gets harder to find in the much-tapped reservoirs of the Middle East.

The Gulf has accounted for 19 percent of U.S. oil production this year, according to the Energy Information Administration.

Oil companies are set to unleash a backlog of drilling and development work in 2014 after years of deep-water exploration with advanced seismic technology, potentially pushing the Gulf’s daily oil production up by 180,000 barrels to 1.55 million barrels per day next year. That follows a 19 percent decline over the previous three years, according to the information agency.

“Companies still see it as a place for production growth and where there are still fields to be discovered and developed,” said Nimmi Henderson, an analyst with Wood Mackenzie. Big integrated producers also are attracted to the region’s easy access to U.S. markets and refineries, she said.

Wood Mackenzie expects the Gulf to beat its 2009 daily production peak of 1.8 million barrels in three years, when the bulk of this decade’s new production will be online. Output could exceed that level in 2016 and 1.9 million barrels by 2020, according to Wood Mackenzie projections...

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