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Gulf looks good for oil, not gas MMS concerned about rapid decline in Gulf of Mexico’s gas production Petroleum News Houston Staff
Oil production in the Gulf of Mexico is expected to increase steadily through 2006 while the outlook for natural gas remains bleak, according to the U.S. Minerals Management Service’s latest five-year projections released May 5.
In fact, MMS has expressed deep concern over the rapid decline in natural gas production because the gulf currently makes up about 25 percent of the U.S. domestic gas supply. The numbers are not encouraging.
MMS projects that gas production, when including natural well declines, will decrease nearly 19 percent to 9.86 billion cubic feet per day in 2006 from 11.98 bcf per day in 2003. When not including natural declines, gas production decreases to 12.51 bcf per day from 13.03 billion cubic feet a day.
In the relatively shallow waters of the continental shelf, which account for 80 percent of total Gulf of Mexico gas production, output plummeted about 29 percent to 3.36 trillion cubic feet in 2002 from 4.76 trillion cubic feet in 1997.
Even more disturbing is the rapid decline of deep-gas wells that produce from what is thought to be the only remaining large gas reservoirs on the aging shelf. MMS studied 45 of these wells completed in 2001 and 2002 and projects that the average time it takes them to go from peak to half production is just two years.
Explorers also are being forced to go deeper to find larger accumulations. According to MMS, the average production rate for a gas well between 15,000 and 16,000 feet is 13,000 million cubic feet per day while the average rate for a well below 17,000 feet is 44,800 million cubic feet per day.
“The shorter the half-life of production from completions relative to lower discovery size of new reservoirs, the greater the need to maintain deep shelf drilling activity to meet increasing demand for natural gas,” MMS said. Outlook for oil brighter The outlook for oil production in the gulf is much brighter, largely due to deepwater fields that are expected to come on steam over the next few years.
MMS projects that oil production when adjusting for natural declines should increase from 1.530 million barrels per day in 2003 to 1.797 million barrels per day in 2006 and then fall to 1.580 million barrels per day in 2007. When excluding natural decline, production increases to 1.926 million barrels a day from 1.706 million barrels per day.
“At some point we’re not going to be able to raise production,” Chris Oynes, Gulf of Mexico regional director for the MMS, said of the deepwater gulf. “But we’re not there yet.”
However, the agency’s estimates obviously do not include any production from future discoveries, which are likely considering the huge resource potential in the deepwater gulf. MMS estimates the deepwater has ultimate reserves of about 71 billion barrels of oil equivalent, of which 56.4 billion barrels remain to be discovered.
By year-end 2007, MMS projects that production from deepwater fields will account for 69 percent of the gulf’s daily output and 28 percent of the daily gas production.
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