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Gulf of Mexico Oil Production Data – Enverus Prism Solutions

 

GOM Oil Leases – Offshore Blocks – Wells – Rig Counts

Gulf of Mexico oil production has been challenging but steady over the years. The GOM Basin is one of the richest historical hydrocarbon basins in the United States. The geographic region starts along the northeastern coast of Mexico, extending to the western coast of Florida and out to the U.S. maritime border with Mexico. Oil drilling and exploration in the GOM began in the 1930s and, as technology advanced, production extended further away from the shores into deeper waters. Despite its maturity, the GOM continues to yield new offshore blocks, oil wells and leases. The oil & gas exploration and production opportunities abound for all operator groups, from supermajors to small-cap independents to privates.

Enverus divides the basin into four distinct plays by water depth: shelf (<350ft), mid-water (350-2250ft), deepwater (2250-4750ft), and ultra-deepwater (<4750ft). These separations are based on the different offshore drilling rigs needed in each environment (Figure 1).

FIGURE 1 | Map of U.S. Gulf of Mexico Oil Production Areas

prism-gulf-of-mexico-oil-exploration-production-mao

Source | Enverus

FIGURE 2 | Historical Oil Production in U.S. Gulf of Mexico

history-gom-oil-wells-leases-drilling-map

Historical Gulf of Mexico Oil Well Drilling and Production Activity

The Gulf of Mexico shelf/shallow-water play has historically had the most exposure and drilling activity. These offshore blocks are the most accessible and the least risky in terms of oil extraction and transportation. Oil production from the GOM basin has shifted away from the gassier shelf to the deeper, oilier plays (Figure 2). In the 1970s and 80s, oil rig technology only allowed for shallow-water drilling; but today, the deepest parts of the Gulf hold the most productive oil wells and leases in the U.S. Advances in drilling and seismic technology have allowed for more sophisticated crude oil and natural gas exploration and production techniques, which sometimes include finding and developing reservoirs below 20,000 feet of salt.

Current Oil Production Activity in Gulf of Mexico

While oil production in the GOM basin has slightly declined from its peak in 2019 due to the global pandemic, the GOM is still an appealing region for operators. Gulf of Mexico oil lease owners and rig operators have recently prioritized short-cycle and low-cost recompletions, infills and tiebacks to weather market uncertainty. There have been nearly 90,000 offshore wells drilled in the GOM to date, with the basin recently averaging ~40 wells per quarter (Figure 3) and rig count increase to 20 – (Figure 4).

FIGURE 3 | Wells Spud Through Time in the U.S. Gulf of Mexico

Source | Enverus

FIGURE 4 | Offshore Oil Rigs Through Time in the U.S. Gulf of Mexico Oil Production Area

env-prism-producing-rigs-gulf-of-mexico-oil-production-well-leases

Source | Enverus

Major Deep Water Gulf of Mexico Oil Production Players

As oil production from the Gulf of Mexico basin matures, operators continue to seek developments in deeper reservoirs. Often with harsher water and subsurface conditions that make drilling oil wells more difficult. Deepwater operators had seen an uptick of new discoveries of potential ILX opportunities and previously deemed unattractive prospects coming back into the economic window as more infrastructure is built in the basin. Recently, the basin has witnessed an influx of supermajors prioritizing deepwater acreage over other global options, primarily due to ample exploration prospects yet to have been used and low-carbon intensities in the basin. In terms of oil and gas production (Figure 5) and acreage (Figure 6), some of the biggest names in the basin include RDSA, BP, XOM, CVX and OXY.

FIGURE 5 | Gulf of Mexico Operators Ranked by Total Trailing 12-Month Oil Production

env-prism-gulf-mexico-oil-production-levels-by-operator

Source | Enverus

FIGURE 6 | Net Acreage by Operator

Source | Enverus

Major Ongoing Oil E&P Projects in GOM

While COVID-19 impacted activity in the basin, there are numerous ongoing oil & gas exploration and production projects in the GOM. One of the biggest is Atlantis (Figure 7). First discovered in 1998, the find spurred a flurry of sub-salt Miocene exploration activity in the Green Canyon area which has since become a primary region for the basin. Atlantis oil wells have been onstream since June 2006, producing on average ~100 Mboe per day since, with the operators recently bringing on Phase 3.

Saint Malo is another major project in the GOM region. Operated by Chevron and producing from Lower Tertiary (Wilcox) tight sandstone reservoirs, it is in the Walker Ridge area. Santo Malo first came onstream in 2012 and has produced steadily since then. Our expert analysis predicts that ~150 MMboe of oil has been recovered so far, with ~350 MMboe remaining (Figure 8).

The GOM offers a wide range of project economics based on the size of the resources being developed and the type of project. Standalone projects typically have higher breakeven prices than tiebacks or infill drilling because of the need to build a rig platform. On a three-quarter cycle basis, inclusive of infrastructure costs, the deepwater GOM offers economics that are competitive with North American shale plays (Figure 9).

FIGURE 7 | Deepwater Drilling Platforms Ranked by CumulativeGOM Oil Production

deepwater-drilling-platforms-gom-oil-production

Source | Enverus

FIGURE 8 | Crude Oil Production Forecast and Activity of the Saint Malo Field

st-malo-crude-oil-production-gom

Source | Enverus

FIGURE 9 | Economics of the Gulf of Mexico Compared to Other Basins

oil-drilling-economics-gulf-of-mexico

Source | Enverus

Hot Topics in Oil Production – Wells – Drilling – Leases

Over the past five years, operators have increasingly shifted activity to tieback developments. These developments are one form of ILX that utilize the abundance of excess platform capacity in the GOM to generate attractive economics (Figure 10). Building a new platform or floating production, storage and offloading facility is very costly, usually in the billions of dollars. We have observed an increasing share of new wells drilled and new blocks purchased near existing infrastructure, a trend consistent with ILX development.

*Figure 1 from Land and Expand report (https://intelligence.enverus.com/research/33206)

Interestingly, the GOM’s Scope 1 carbon emission intensities are the lowest of any basin in the U.S. and are competitive on a global scale (Figure 11). Enforced by strict ESG regulations in the region and availability of ample infrastructure, the GOM is still a competitive choice for international oil companies searching for new, low-carbon acreage that can be developed. The lease of Sale 257 that took place Nov. 17, 2021, garnered $192 million in winning bids and was largely dominated by supermajors who are leading the energy transition. The continuous development and investment from supermajors highlight the strong sustained competition for acreage in the basin, despite further commitments to reduce oil production and carbon emissions.

For more details, follow our blog posts: https://www.enverus.com/blog/supermajors-pile-into-low-carbon-gom-acreage/

FIGURE 10 | GOM Mid/Deepwater Total Platform Capacity Utilization

gom-oil-rigs-platform-capacity

Source | Enverus

FIGURE 11 | North America GHG Emission Intensity by Major Regions

ghg-emissions-gom-oil-wells

Source | Enverus

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