A Phoenix Rising from the Ashes
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Wood Mackenzie predicts that oil and gas production from the Gulf of Mexico will reach two million barrels of oil equivalent (BOE) per day by 2018 or 2019. This level of production is up more than 40% from current levels and reflects the strong rebound in activity since the Macondo oil spill in 2010.
Wood Mackenzie Study
Wood Mackenzie is a consulting firm that conducts research and provides other services related to the energy, metals and mining industries. The company has 20 offices and began operations in the 1970’s.
Wood Mackenzie reported that current oil and gas production in the Gulf of Mexico is approximately 1.4 million BOE per day, and will rise to 2 million BOE per day by 2018 or 2019. The study predicts that the industry will invest $27 billion through 2015 on various projects, including $20 billion on development wells and $7 billion on subsea equipment and other infrastructure.
Wood Mackenzie also expects a significant level of exploration spending in the Gulf of Mexico over the next few decades, with estimated spending of $70 billion through 2030. This activity is expected to find as much as 12 billion BOE.
One deepwater development project that recently started up production was the Caesar Tonga development operated by Anadarko Petroleum (NYSE: APC). The company expects production from this project to reach a peak level of 45,000 BOE per day and estimates total resources there at between 200 million and 400 million BOE. The project will produce from three separate oil and gas fields, and be tied into the Constitution Spar also operated by Anadarko Petroleum.
The Jack and St Malo development project is one of the largest in the Gulf of Mexico, 51% of which is owned and operated by Chevron Corporation (NYSE: CVX). The company approved the development of the project in late 2010 and is looking for first production here in 2014.
Chevron estimates an initial investment of $7.5 billion at the Jack and St Malo development project, and productive capacity of 170,000 barrels of oil and 42.5 million cubic feet of natural gas per day here. The company projects between 500 million BOE and one billion BOE of recoverable resources over the life of the project.
Other oil and gas companies with large stakes in the Jack and St. Malo project include Petrobras (NYSE: PBR) and Statoil (NYSE: STO), which own 25% and 21.5% shares, respectively. Exxon Mobil and Eni have a much smaller share, with each company owning a 1.25% share of the project.
One large deepwater discovery that is still being appraised by the industry is the Kaskida field located in the Keathley Canyon area of the Gulf of Mexico. The first successful well was reported here in August 2006 and found approximately 800 net feet of oil and gas pay.
BP (NYSE: BP) is the operator and owner of this field, and confirmed a western extension of the field with another successful well in 2009. The company is targeting the Lower Tertiary trend and received a permit to drill an additional well at this prospect. BP plans further appraisal at Kaskida before moving into the development phase of this project.
Exxon Mobil is the operator of the Hadrian project and reported three successful wells here in June 2011. The company estimates that the four offshore blocks at Hadrian contain 700 million BOE of recoverable oil and gas resources. The project is expected to produce through a subsea tieback to the Lucius Spar under construction and operated by Anadarko Petroleum.
The Gulf of Mexico is recovering nicely from the moratorium imposed after the 2010 oil spill, and will resume its key role as an important component of our domestic energy supply. This can only benefit our goal of reduced dependence on foreign sources of oil.
shaleplays has no positions in the stocks mentioned above. The Motley Fool owns shares of ExxonMobil. Motley Fool newsletter services recommend Chevron, Petroleo Brasileiro S.A. (ADR), and Statoil (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.