Deepwater Gulf of Mexico oil production is expected to reach 1.9 million barrels of oil equivalent per day in 2016, according to a new study by Wood Mackenzie. It would be the first new production peak since 2009.
Production will grow at a clip of 18% year-to-year between 2014 and 2016, Wood Mackenzie said. That growth will intensify in 2016 when the Heidelberg field comes online and the Jack/St. Malo project ramps up. Wood Mackenzie said production would plateau after the expected peak in 2016 due to depletion from legacy fields and a limited number of new fields coming online.
Production growth will be driven by new developments and by the redevelopment and extension of older fields. Wood Mackenzie analyst Imran Khan said producers are currently up against a number of economic challenges that could make deepwater Gulf of Mexico production growth difficult in the next decade. Those include high costs, technological limitations and low recovery rates. Khan said the current oil price slump would also be a drag on growth, particularly if the trend continues over the long term.
Wood Mackenzie said its long-term outlook and the highly capital intensive nature of deepwater drilling underscore the need for energy firms to keep investing in projects that support production increases.
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