Viewpoint: US Gulf oil output rises despite price

OREANDA-NEWS. December 25, 2015. US Gulf offshore crude production rose to nearly 1.7mn b/d in September, its highest level in over five years despite oil prices falling to their lowest since 2009 as long lead times for deepwater projects keep them on schedule.

Oil production from US Gulf federal waters rose to 1.69mn b/d in September, about 275,000 b/d more than six months earlier and the highest since February 2010, with production rising from both mature field expansions and new projects.

Deepwater oil production is less reactive to oil price changes than onshore projects given the longer time required for bringing the large projects from planning to production. So projects slated to come online in 2016 are still expected to go ahead, but final investment decisions for investments further in the future may be held.

Mars crude pipeline volumes rose to average about 385,000 b/d between August and October, about 43,000 b/d more than in the first-quarter, with Shell bringing on a new Medusa field well and higher volumes coming from the Amberjack pipeline. Chevron's Jack-St Malo field came online in late 2014 and volumes from it into the Amberjack pipeline continued to rise this year.

Although Shell's Mars B expansion of the original Mars field using a second platform started in 2014, drilling continues, augmenting the stream's volumes as well.

Anadarko's 80,000 b/d Lucius project reached capacity in the second-quarter following startup in January. Lucius crude feeds into the Bonito or Poseidon crude streams. The Poseidon crude stream averaged about 205,000 b/d in August to October, about 16,000 b/d more than in the first-quarter.

Average Thunder Horse crude volumes topped 100,000 b/d between August and October, about 15,000 b/d more than in the first-quarter. Noble's Big Bend and Dantzler projects came online in the fourth quarter with combined peak production estimated to be about 40,000 b/d.

The Hess-operated 50,000 b/d Tubular Bells field started in late-2014 and continued to add volumes this year into Heavy Louisiana Sweet (HLS) crude. Also feeding into HLS, LLOG-operated 100,000 b/d-capacity Delta House field came on line in April.

Mid-next year, Anadarko's 80,000 b/d Heidelberg project is scheduled to put oil into Texas-delivered Southern Green Canyon (SGC) or Louisiana-delivered Poseidon.

Although not actively spot traded, Southern Louisiana Intermediate (SLI) volumes will rise with Deep Gulf Energy's Kodiak field to come online this quarter and Noble's 20,000 b/d Gunflint field slated to commence production by mid-2016. SLI is generally priced against Heavy Louisiana Sweet.