US Gulf of Mexico is poised for continued record crude production
US Gulf crude output is projected to grow from an all-time high of 1.68mn b/d in 2017 to an average of 1.75mn b/d in 2018, and 1.86mn b/d in 2019, according to the US Energy Information Administration (EIA). Relatively stable oil prices are aiding the higher production in the US Gulf, along with the timing of developments that were adapted to a lower crude price environment and are now ready to ramp up output.
When Ice Brent and Nymex WTI prices crashed from above $100/bl in the summer of 2014 to around $70/bl in the fall of 2014, many long-term, large-scale deepwater developments were rendered cost-prohibitive. Some early stage projects were canceled altogether while others were redesigned to lower breakeven economics, harnessing cost-savings from sub-sea tiebacks and field expansions, over large-scale standalone projects. Those careful adjustments are starting to payoff.
"We've got some pretty drastic increases in 2018 and 2019 from decisions that were made in 2014 or so," said William Turner, a senior research analyst at Wood Mackenzie.
Beyond 2019 production growth will come from operator commitments to expand production based on stable oil prices, he said. And the profitability of delayed-yet-streamlined projects is already looking more secure, with both WTI and Brent staying above $60/bl this year.
Production is expected to ramp up at Shell's 100,000 b/d Olympus platform, which feeds into the Mars pipeline to Louisiana Offshore Oil Port (LOOP) storage in Clovelly, Louisiana — the pricing point for medium sour Mars.
The Mars stream will also gain with the May 2018startup of the Shell-operated Kaikias field, which came online a year ahead of schedule and is tied back to the 150,000 b/d-capacity Ursa hub. Mars volumes have already risen this year, increasing to 466,000 b/d in the first-quarter from 449,000 b/d in the previous quarter.
Shell's Stones field is also ramping up. Shell transports a medium-to-heavy sour crude flow from Stones to the coast through a 60,000 b/d floating production, storage and offloading (FPSO) vessel, called Turritella, with an assessed peak output of 50,000 boe/d.
The Chevron-operated Tahiti field is embarking on a third development phase to add estimated capacity of 125,000 b/d. Crude is transported to the Boxer platform located in Green Canyon Block 19 (GC 19). Ahead of the production increases that are ultimately carried to the Boxer platform, in 2016 a debottlenecking project increased takeaway capacity from the platform by 60pc. From Boxer, crude can flow into pipelines that feed into multiple streams — medium sours Poseidon, Mars, and Southern Green Canyon (SGC) — as well as lighter sours Eugene Island and Bonito.
Hess' 80,000 b/d-capacity Stampede project that came online in January also moves to the Boxer platform, with production expected to continue rising through mid-2019.
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