Bud's Offshore Energy (BOE)

EIA has released the April oil production data. The Federal waters of the Gulf of Mexico produced 1.831 million BOPD in April, which is essentially level with corrected March production (1.817 million).

GoM production fell more than 12% from nearly 2 million BOPD in September 2023 to 1.743 million BOPD in January 2024 before climbing back to 1.8 million BOPD over the past 3 months (see chart below). What’s up?

• The mysterious Main Pass Oil Gathering (MPOG) system shutdown in November 2023 no doubt contributed to the decline, but that system was reported to be fully online in April. Based on the GoM data, the MPOG shutdown may have reduced production by 50-80,000 BOPD. That would account for less than half of the GoM decline since Sept 2023.
• We may learn more about the MPOG shut-in volumes when the NTSB investigation report is published. (Don’t expect a report soon. The NTSB report on the Huntington Beach pipeline spill took nearly 2 years to complete. The final NTSB report on the deadly December 2022 GoM helicopter crash has still not been issued.)
• EIA’s June 2024 GoM production outlook calls for 1.81 million BOPD in 2024 and is thus aligned with the actual March and April 2024 data.
• In 2022, EIA projected that additional GoM capacity would offset production declines, but would not sustain crude oil production at levels of 2.0 million BOPD. That forecast has proven to be accurate.
• BOEM’s projected 2024 production of 2.013 million BOPD. Unfortunately, their rosy production forecasts, along with unrealistic expectations for the “transition,” were used to justify a sub-minimal 5 year leasing plan with the fewest sales in history.
• Bottom line: 1.8 million BOPD does in fact appear to be the current GoM production baseline. The GoM is thus significantly under-performing BOEM forecasts. This should be a concern to those who support responsible OCS production.

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