Deepwater Gulf of Mexico 2004: America's Expanding ... - OCS BBS

S hallo w-
wa ter GOM
11%
Deepwater
GOM
17 %
Shallowwater
GOM
16 %
Deepwater
GOM
7%
Other U.S.
72%
Other U.S.
77%
Figure 60. Estimated U.S. oil and gas production in 2002.
Figure 61a illustrates historic trends in oil production. Shallow-water oil production rose rapidly in
the 1960’s, peaked in 1971, and has undergone cycles of increase and decline since then. Since
1997, the shallow-water GOM oil production has steadily declined and, at the end of 2002, was at its
lowest level since 1967. The deepwater GOM oil production, however, is in the midst of a dramatic
increase similar to that seen in the shallow-water GOM during the 1960’s. Melancon et al. (2003)
predict that this production surge has not yet peaked. This strong increase in deepwater oil
production more than offsets recent declines in shallow-water oil production. In 2002, deepwater oil
production accounted for approximately 61 percent of GOM oil production.
Figure 61b shows similar production trends for gas. Shallow-water gas production rose sharply
throughout the 1960’s and 1970’s, and then remained relatively stable over the next 15 years before
declining steadily from 1996 through today. Although the deepwater gas production increase has not
been as dramatic as with oil, the steady increase in deepwater gas production that occurred in the past
few years offsets the shallow-water decline. Appendix H lists historical GOM oil and gas production
rates. These trends in oil and gas production indicate that the deepwater GOM frontier continues to
expand.
As discussed previously, the Deepwater Royalty Relief Act (DWRRA) had a significant effect on
deepwater leasing and drilling. Numerous projects with royalty relief eligibility have come online in
recent years (table 4), but the impact of the DWRRA on deepwater production is just now beginning
to show. Figure 62a shows the contribution of Deepwater Royalty Relief (DWRR) oil production to
total “deepwater” GOM oil production, where “deepwater” is defined as 200 m (656 ft), the
minimum water depth for which DWRR incentives are offered, instead of 1,000 ft (305 m), the
definition used elsewhere in this report. The amount of oil production subject to royalty suspension
has hovered around 5 percent of the total “deepwater” production since mid-2001. Figure 62b
displays total “deepwater” gas production along with pre-DWRRA and post-DWRRA gas production
subject to royalty relief. The volume of natural gas subject to DWRR increased rapidly in 2002,
reaching 14 percent of total “deepwater” production by the end of that year. Note that pre-DWRRA
production refers to production from leases that have been approved to receive DWRR but were
issued before November 28, 1995. Post-DWRRA production refers to DWRR production from
leases that were issued after that date.
Approximately 300,000 barrels of oil and 2 billion cubic feet of gas come from deepwater subsea
completions each day. Subsea completions currently account for about 30 percent of deepwater oil
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