One of the points BP highlighted when launching its annual statistical review on Wednesday was that the Gulf of Mexico had made the biggest contribution to global oil supply growth in 2009.
BP’s chief executive acknowledged that was due to Opec quotas, but added “This is not an excuse for anything but a piece of the reality in which we all live.”
But this isn’t necessarily going to continue — new regulations (or moratoria) or not. BP’s statistical review doesn’t do forecasts, but the US Department of Energy’s EIA does, and so does the International Energy Agency. And they have very different views on the future of US oil production, in particular from the Gulf of Mexico. In fact the EIA is far more optimistic than either the IEA or the Minerals Management Service.
[NB: All these forecasts were published in the past seven months, but all were made prior to the Deepwater Horizon accident and ensuing reviews of offshore leases and regulations.]
This is how the EIA sees it:
The EIA is particularly bullish, seeing deepwater offshore fields as accounting for ‘the vast majority’ of what would be a steady rise in US oil production from 2008 out to 2035, under its reference scenario. As it wrote:
Fields that started producing in 2009 or are expected to start in the next few years include Great White, Norman, Tahiti, Gomez, Cascade, and Chinook. All are in water deeper than 800 meters, and most are in the Central Gulf of Mexico. Production from those fields, combined with increased production from fields that started producing in 2007 and 2008, contributes to the near-term growth in offshore production. Over the longer term, production from the continued development of other recent discoveries, as well as new discoveries, offsets production declines in older fields, resulting in an increase in production through 2035
The EIA uses ‘scenarios’; and the above is based on its ‘reference scenario’. Alternative scenarios relate to oil prices and to technological advances:
Others are less sure. The IEA itself seems to think that GoM, at least, will peak in the next few years. As this chart from its December medium-term oil market report indicates, for instance:
The two agencies are known to have diverging views, but this difference is pretty strong.
Perhaps the IEA is less optimistic about technology breakthroughs?
But the Minerals Management Service, which receives all the data submitted by GoM operators, is no more optimistic than the IEA.
While lacking a little in fancy graphs, its ‘Gulf of Mexico Oil and Gas Forecast: 2009 – 2018‘ shows a clear decline in production also from the middle of this decade. And that’s under both its scenarios: ‘committed’, and ‘full potential’ — which, as you can see (click to expand) includes both discoveries that hadn’t yet had committed development, and discoveries not yet made.
So, is the EIA is hoping for quite a lot of technological breakthrough, and yet-to-be-made discoveries?
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