Offshore oil producers reduced cost by 20 % to stay competitive

Fuel Fix:

Oil and gas production could reach an all-time high in the deep waters of the Gulf of Mexico this year as companies cut costs and spend less on exploration.

Deepwater output in the Gulf could climb to 1.9 million barrels of oil equivalent in 2018, a 13 percent increase above last year and 10 percent higher than the last peak in 2009, energy research firm Wood Mackenzie said in a new report this week.

Gulf operators have dramatically cut costs in recent years and are pumping oil and gas more efficiently after adopting new automated drilling technologies, the firm said.

"Although deep-water Gulf of Mexico has taken quite a beating over the last three years, the industry has clawed its way back to being competitive," said William Turner, a senior research analyst at Wood Mackenzie.

Last April, Wood Mac said the cost of deep-water projects have fallen by a fifth on average since crude prices collapsed in the summer of 2014, because of lower rig prices and moves to redesign projects and pump higher quantities of oil from wells.

But oil and gas exploration around the world will continue on the backburner, which could make the region's current oil-production levels unsustainable in coming years.
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With the Trump administration opening up huge areas for exploration and production, it could spur new activity in areas that have previously been off limits because of pressure from the anti-energy left.  Removing some of the regulatory burdens could also reduce the cost of operations even more.  The downturn in oil prices forced the oil business to become more efficient.  The shale drillers have made obvious strides and now it appears the Offshore producers are trying to catch up.