Gulf of Mexico crude oil production to increase with new projects in 2021, 2022
Crude oil production in the US Federal Gulf of Mexico (GoM) will increase in the next 2 years, the US Energy Information Administration (EIA) forecast in its latest Short-Term Energy Outlook (STEO). By end-2022, 13 new projects could account for about 12% of total GoM crude oil production, or about 200,000 b/d.
The GoM accounts for 15-16% of US crude oil production. In 2020, GoM crude oil production averaged 1.65 million b/d. Production is forecast to exceed 2020 levels, reaching 1.71 million b/d in 2021 and 1.75 million b/d in 2022. Since 2000, the highest crude oil production year was 2019 at 1.9 million b/d.
Large offshore projects take several years to develop. Four of the new projects will likely begin production in 2021 and nine more in 2022, according to Rystad Energy. Crude oil production is subject to geologic conditions, economics, and project timelines. The future oil markets remain uncertain and future projects' timelines may change.
Hurricanes are a critical element in the GoM forecast. The Atlantic hurricane season is typically June 1–Nov. 30. Although eight new projects started crude oil production in 2020, annual production was lower than 2019 levels because of pandemic-related shut-ins and the most active Atlantic hurricane season on record. Hurricane Delta shut in 1.6 million bbl of oil production over 2 days in October, the highest peak shut-in of the hurricane season. However, the combined effects of Tropical Storm Marco, followed quickly by Hurricane Laura, led to 15 days of shut-ins, which more than doubled the total shut-in production from Hurricane Delta and resulted in the most shut-ins since 2008.
Colorado State University’s Seasonal Hurricane Forecasting forecasts that the 2021 Atlantic hurricane season will be above average, compared with the 40-year average. The university estimates 8 hurricanes and 17 named storms. The National Oceanic and Atmospheric Administration will release its Atlantic Hurricane Season Outlook for 2021 in May. A hurricane’s actual impact on the GoM oil and natural gas industry is challenging to determine because the hurricane path has a significant effect on the size of the impact. Hurricane paths cannot be determined until the weather pattern is established, which happens days before the hurricane hits.
To forecast hurricane outages in STEO, EIA uses historical data to determine an average percentage of outages for the Atlantic hurricane season. Historically, most GoM shut-ins occur in October. In 2020, hurricane-related disruptions started earlier than normal with Tropical Storm Marco and Hurricane Laura in August.
