A Bell Tolls for GOM

The Deepwater Horizon disaster could be addressed almost prismatically as there’s no shortage of issues to pursue. But today we’ll get started with just some simple facts surrounding oil production in the Gulf. By now, you will have probably learned that without Gulf of Mexico (GOM) production the US’s woeful oil balance would tip even further into the red. I’ll deal with some broader issues of this spill as the week goes on, but first let’s look at annual production data from GOM.

Annual production peaked in 2003 at an average of 1.559 mbpd (million barrels per day). You can anticipate already that, given hurricanes, the monthly data for GOM production will be much more volatile. And while that is certainly true, it’s important to not regard hurricanes as events that artificially depress the production capability that geology would otherwise provide. Why? Because as the quip might go: In the Gulf of Mexico…bad weather is not a bug. It’s a feature. With these cautionaries out of the way, let’s look at the monthly production data–which also uses mbpd.

Ah-hah! I hear you say. GOM has not peaked! And in terms of monthly production, that would be true. December 2009 for example hit a new high of 1.715 mbpd. However, for full year 2009 (not shown on the above chart) the annual average comes in at 1.539 mbpd. Admittedly pretty close to the 2003 high of 1.559 mbpd.

So, why the big jump in GOM production in 2009? Well, because of the previous rollout of deepwater drilling projects like Horizon (remember, Horizon was a drilling project–not a production project). Only through deepwater drilling can the industry keep creating productive wells for the big production rigs like Thunderhorse and Tahiti. In 2009, both Thunderhorse and Tahiti were ready to produce again, as previewed in the March 2009 EIA’s Short Term Energy Outlook (STEO). | see: pages 3-4 in the STEO PDF. Thus 2009 GOM production rose.

A bell tolls for GOM because should there be a halt to all new deepwater drilling, future projects will not come online. Accordingly, the natural decline rate for US oil production–at work since the early 1970’s–will once again make itself known. I suppose it’s sort of fitting that 2009 was the first year in many(since 1991) when US oil production actually rose (by a little). Some of that was from the Bakken formation in North Dakota. | see: North Dakota 4. But the mjaority of the increase (net of declines) came from the Gulf.

-Gregor

Further Reading:

9 February 2009: USA Gulf of Mexico Oil Production Forecast Update, from The Oil Drum.

3 May 2010:  Oil Spill Casts Pall Over Offshore-Oil Conference In Houston, from The Wall Street Journal.

  • http://thegreenskeptic.com/ greenskeptic

    You and I agree, if I recall correctly, in our position on off shore drilling in general. I wonder what your thoughts are on deepwater drilling in the wake (pun intended) of this tragic accident. I once thought the industry had the engineering know-how to make such development work environmentally, if not economically. Now, I'm not so sure.

    (Note that, above, I said accident. I am not among those fools — such as Rush — who believe this was a conspiracy of sabotage by either the left (to advance the climate bill) or the right (to kill it).

  • TraderVic

    Greenskeptic, actually Rush never said that. What he said was, given that the Feds dispatched a “SWAT” team to Deepwater Horizon, that perhaps they hadn't ruled out a sabotage scenario.

  • http://www.chinavortex.com pdenlinger

    What are the chances that gas will be $5 a gallon on the Gulf coast, while the beaches are covered in oil?

  • Jeffrey J. Brown

    Oil production from the main producing structure at Thunder Horse has plunged, from 168,000 bpd in January, 2009 to 64,000 bpd in January, 2010, with more than a six fold increase in water production:

    http://www.theoildrum.com/node/6415

  • gregor.us

    I lean towards the view now that this leak will likely become so damaging, that it will affect offshore decision making in many developed countries around the world–and thus crimp offshore (at least in Democracies)–for some time to come. It's a nail in the coffin of supply growth.

    G

  • gregor.us

    Pretty good. Ixtoc took 9 month to stop, and that was only in 150 feet of water.

    I think this is one of those events that is going to play out over a long enough timespan to kill most people's attention. But that of course will only heighten the contrast with the breadth of the damage.

    G

  • gregor.us

    Thanks for that. On an annual basis however, the full Thunderhorse complex was indeed a big part of the 2009 jump in US production. Of course, “jump” has been defined down now to a measly 250-300 kbpd increase, given the domain of decline we now occupy.

    G

  • Ian_M

    It makes all that oil off the coast of Brazil seem lot further away.

  • gregor.us

    That's right. But when you are sitting as I have in front of a beautiful presentation by a charismatic petro engineer from Sao Paolo who is showing you the vast, vast resources out there in the ultra-deepwater, even a supply bear like me can get carried away. :-)

    But objectively speaking we sort of knew all this as we went along. When the PBR chief got the bill just for exploratory drilling in the billions he gulped and said “125 dollar oil is not looking so cheap after all.”

    G

  • gregor.us

    That's right. But when you are sitting as I have in front of a beautiful presentation by a charismatic petro engineer from Sao Paolo who is showing you the vast, vast resources out there in the ultra-deepwater, even a supply bear like me can get carried away. :-)

    But objectively speaking we sort of knew all this as we went along. When the PBR chief got the bill just for exploratory drilling in the billions he gulped and said “125 dollar oil is not looking so cheap after all.”

    G