Posts Tagged ‘oil production’

Yesterday, Lars Herbst attended the EIA’s Annual Energy Outlook presentation. The slides are attached.

Below is a custom chart from the EIA data tables. While EIA predicts growth in renewable generating capacity, US oil and gas production are nonetheless projected to increase slightly through 2050.

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Exxon is now producing >360,000 bopd from just two Guyana FPSOs. So these two FPSOs are producing about 20% as much oil as the Gulf of Mexico or Norway. A third FPSO will add 220,000 bopd in 2023.

Guyana’s oil output is expected to increase significantly in 2023, as both projects maintain steadier production at capacity throughout the year, and as the third project, Payara, comes on stream in the second half of the year. Payara will add another 220,000 bpd of production capacity to Stabroek Block output, taking it to 580,000 bpd.

Oil Now

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Like its salty neighbor to the east, the Permian Basin of west Texas and southeastern New Mexico has been proclaimed dead on many occasions. Such proclamations of their demise, however, are mere exaggerations as the Gulf of Mexico and the Permian Basin continue to thrive.

These historic oil and gas production powerhouses have delivered to global markets billions of barrels of oil and trillions of cubic feet of natural gas over the past century. Through the booms and the busts, the resiliency of each was made possible by the combination of ingenuity and perseverance and by advancements in techniques and technologies.


Thirty years ago the Gulf of Mexico was called “the Dead Sea” because of the decline in drilling and production activity. Deepwater technology reversed that trend and led to record Gulf of Mexico oil production averaging 1.9 million BOPD in 2019.

Similarly, horizontal drilling and hydraulic fracturing technology launched the shale revolution, and Permian oil production has risen impressively to 5.4 million BOPD.

Both the Permian and the GoM have the potential to sustain or increase production. The Permian Basin, much of which is privately owned, is more adaptable to market conditions and less exposed to political risks. The offshore program is dependent on effective long-term planning and supportive lease management policies. Unfortunately, the proposed 5 year leasing plan suggests a commitment to throttling offshore production rather than sustaining it. When will our energy policy pendulum swing back to a more balanced position?

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The EIA forecast looks about right. Production from new projects should offset existing field declines and maintain relatively stable volumes over the next 2-3 years. In the intermediate and longer terms we have problems given the dearth of exploratory drilling and new discoveries, and the complete absence of leasing.

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active leases ➡ producible leases ➡ energy production

The future of US offshore energy production is in jeopardy. As is clear in the first chart below, the problem is the precipitous decline in opportunities (l.e. leases), not the will to produce. At 27.3% (6/2022 data), the % of active leases that are producing is near the historic high of 30%. The spin doctors really need to drop the old and tired nonproducing leases excuse.

While not nearly as high as it could be with better lease management, offshore production has held up relatively well thanks to deepwater discoveries that were made years ago and technical innovation that makes projects more cost-effective, safer, and cleaner. Gulf of Mexico production should be relatively stable for several years as production from these projects offsets declines elsewhere. However, in the intermediate and longer term, reserve depletion and the absence of new exploration opportunities ensure a downward production trend.

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Waiting for a boost from the deepwater startups. The first of that group, King’s Quay did not begin producing until April.

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  • Operating companies that produced >1 million bbls of oil or >1 BCF of gas in 2021 are listed in descending order based on oil production.
  • Both the total number of well starts and the number of exploratory wells are indicated
  • An INC is an Incident of Noncompliance (i.e. a violation). W=warning, CSI=component shut-in, and FSI=facility shut-in are the enforcement actions.
  • All of the below data are publicly available on the BSEE-BOEM websites.
oil (MMbbls)
gas (BCF)
well starts

Anadarko (Oxy)67.757.88-68-5-1
QuarterNorth4.28.3no data
GoM Shelf2.34.852-5-2
Samchully0.021.2no data


  • “Energy transition” companies Shell and bp still love the Gulf of Mexico, which is a good thing for them and us. Together they accounted for 42.4% of the 2021 oil production.
  • The top 4 producers, Shell, bp, Chevron (includes Unocal), and Anadarko accounted for 2/3 of GoM oil production, nearly all of which was from deepwater leases.
  • Those are impressive production numbers for Anadarko (Oxy). No wonder Warren Buffett likes Oxy stock.
  • The relative number of deepwater exploratory wells is mildly encouraging given our concerns about sustaining production.
  • Exploratory well determinations are rather subjective and may not be entirely consistent.
  • Understandably, no exploratory wells were drilled by Arena or Cantium, the companies responsible for most well operations on shelf (shallow water) leases.
  • Overall, the INC numbers are impressively low for the deepwater operators, with Chevron and LLOG standing out. BSEE does not post the specific violation information (more on this in an upcoming post), so it’s difficult to properly assess a company’s compliance record.
  • Unfortunately, incident data could not be included on the scoreboard. BSEE’s incident tables are badly out of date, and no 2021/2022 summaries have been posted.
  • Fieldwood’s disturbing INC numbers were discussed earlier this year. High INC rates for 3 other operators have also were noted last month.
  • Exxon production is limited to the Hoover Diana spar, which was installed 22 years ago. The largest US oil company has only drilled one GoM exploratory well (2018) in the past 5 years. Currently, their main GoM interest seems to be the sequestration (disposal) of onshore emissions. (More on this topic in an upcoming post.)

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Even after full recovery from Hurricane Ida, Gulf of Mexico production remained well below the August 2019 monthly peak of 2.044 million BOPD. Production should trend upward in the near term as the Vito, Anchor, Argos, King’s Quay, and Whale floating production units come online. However, to sustain production near or above 2 million BOPD, exploration activity needs to be stimulated. This will be difficult given the suspension of leasing, and the continuous legal and administrative challenges.

Meanwhile the April 1 rig count held steady at 14.

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February 2022:

For a second time this week, Fatih Birol, the executive director of the International Energy Agency (IEA), called on the OPEC+ group on Wednesday to narrow the widening gap between its production quotas and the much lower actual supply to the market.


May 2021:

There is no need for investment in new fossil fuel supply in our net zero pathway

IEA Roadmap for the Global Energy Sector

So much for what remains of the IEA’s credibility.

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