East Daley Analytics – Dissecting the Energy Value Chain
Energy Insights and News

Gulf of Mexico Production Climbs on Deepwater Projects

Comments: 0

The Daley Note: October 20, 2023

Several deepwater projects have started up this year and are helping lift US Gulf of Mexico (GOM) oil production.

The GOM accounts for 15% of total US crude oil production. Offshore production has not returned to pre-pandemic levels but has been steadily increasing since 2022.

tdn 10.19

GOM production averaged 1,929 Mb/d in July 2023, an increase of 250 Mb/d from January 2022 output of 1,680 Mb/d, according to East Daley’s Crude Hub Model (see figure). Poseidon Pipeline has seen the biggest increase in flows and is now at ~92% utilization in the Crude Hub Model.

Several deepwater projects are contributing to higher supply this year. Woodside in September started the Shenzi North project, located in the Green Canyon area 120 miles offshore Louisiana. Shenzi North will feed into the Shenzi platform, which is sized to produce up to 100 Mb/d of crude oil.

In April 2023, BP brought its deepwater Mad Dog Phase 2 project online in Central Gulf waters. Mad Dog is owned by BP (60.5%), Chevron (15.6%) and Woodside (23.9%). BP estimates the new project can produce up to 120 Mboe/d of oil and natural gas.

Privately owned LLOG Exploration is the lead operator for the two largest GOM projects coming online over the next two years. The Shenandoah field is expected to hit first oil in late 2024 with maximum production of ~100 Mb/d.

The Salamanca field, a second LLOG project, has a total capacity of 60 Mb/d and should produce first oil in early 2025. According to East Daley’s Crude Hub Model, both projects will be transported to the Cameron Highway Pipeline Offshore System (CHOPS) operated by Genesis Energy (GEL). East Daley includes these expansions in the Financial Blueprint for GEL.

Despite the recent gains, the offshore industry will need to continue exploring new acreage to maintain production, and the news has been ominous on this front.

In its latest five-year lease plan, the Interior Department has proposed the fewest offshore oil and gas lease sales in history. The agency’s environmental impact statement for the 2024-29 Outer Continental Shelf leasing program proposes a maximum of three oil and gas lease sales in the GOM. To stay in compliance with the Inflation Reduction Act, the three proposed lease sales are the minimum number required for the Interior Department to continue expanding its offshore wind leasing program. – Kristine Oleszek Tickers: BP, GEL.



Sign Up for the Crude Oil Edge

East Daley’s Crude Oil Edge provides weekly updates on the US crude oil market including supply and demand fundamentals, basin-level views, and analysis of market constraints and infrastructure proposals. We explore sub-basin dynamics and provide market insights on crude oil flows, production growth, and import and export characteristics. Sign up now for the Crude Oil Edge.

Energy Data Studio

East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.

Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.

Energy Data Studio is available through data downloads from the visual interface, in Excel files, or as a direct feed delivered into subscribers’ workflow via secure file transfer. To learn more about Energy Data Studio, please contact insight@eastdaley.com.

The Daley Note

Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.


About the AuthorEast Daley Analytics