While the industry and public have been focused on unconventional onshore production, offshore oil production has been steadily growing. Many offshore projects reflect long-term financial commitments made before the oil price collapse. They will continue to come online for at least the next couple of years.
Offshore oil production continues to climb in the Gulf of Mexico (GOM) in spite of low oil prices. This reflects the long lead time for large, complex offshore fields as well as a rebound from a multi-year offshore drilling slump related to the 2010 deepwater drilling moratorium. The Energy Information Administration (EIA) reports eight GOM field startups in 2014 and expects eight more in 2015 and five in 2016.
EIA estimates that GOM production reached 1.52 million barrels per day (bbl/d) in 2015 and will be 1.61 million bbl/d in 2016. This 2016 production volume would set a record.
As you would expect, recent offshore production growth has been overshadowed by unconventional onshore production. EIA reports that in 2003, 27 percent of U.S. crude oil was produced in the GOM. By 2014 that share had declined to 16 percent. The Gulf’s share of U.S. natural gas production declined even more sharply — from 26 percent in 1997 to 5 percent in 2014.
Global offshore production is also growing. The International Energy Agency (IEA) projects that the offshore could deliver 20 percent of global oil production by 2017, driven by deepwater production growth. Global deepwater oil production was 5.7 million bbl/d in 2012 and is projected to be 8.3 million bbl/d in 2017.
Offshore production growth benefits from both a huge offshore resource base and continuing technological innovation. IEA estimates that almost half of the 2.7 trillion barrels of remaining recoverable conventional oil is in offshore fields.
Technology is helping grow this resource, allowing production from deeper water and boosting recovery from existing fields.
- In 1978 the first wells were drilled in deepwater (defined as 1,000 feet or more). Not long ago, Shell drilled a potentially productive GOM well in 9,500 feet of water. Equally deep wells are being drilled around the globe.
- The story of ongoing productivity in shale plays is well documented. Recovery rates are also improving in offshore conventional wells. For example, IEA notes that the average recovery factor from the Norwegian Continental Shelf has grown from 34 percent to about 46 percent over the past 20 years, largely driven by technology advances in horizontal/multilateral drilling, seismic technology and subsea facilities.