It’s been two years since the Deepwater Horizon oil spill in the Gulf of Mexico (GOM) and the resulting moratorium on offshore drilling in those waters. After an expected lull in production, the oil and gas industry has made a comeback. Here’s a closer look at the status of drilling in GOM today.
Back in Business?
Although production rates are still down 23% from the pre-Macondo peak, the permit issuance rate and deepwater rig count are both back up to pre-Macondo levels, and as of April 2012, there were 37 floating rigs operating in GOM, with 10 more rigs contracted to start this year.
As you can see from the chart above, the YE-’12 floater rig count is the highest it’s been in 5 years. However, preliminary production is still down 6% from pre-Macondo levels, but up 22% from the all-time lows in September 2011, and the current output is 17% lower than the levels just before Macondo occurred.
A Rebound in Permit Issuance
Today, the average exploration and development plan involves an average of 3.6 wells, which is higher than the average of 2.5 wells before Macondo. However, receiving a permit for new wells is taking an average of three times longer for exploration wells, twice as long for development wells, 29 days longer for sidetracks, and 8 days longer for bypasses.
Additionally, the permit issuance rate for new wells is about the same as the pre-Macondo average, however the number of permits fluctuates from month to month versus in the pre-Macondo era, the average rate was steadier.
Same Operators, Different Rock Formation
The top 50 oil fields still account for 71% of the production in the Gulf of Mexico, which is about the same as the pre-Macondo era. Also similar to pre-Macondo, the top 6 fields account for 41% of production. Still, the output of these 6 fields is quite a bit lower than their peak production rate in August of 2009.
Majors Dominate Post-Macondo GOM
Since Macondo, 53% of drilling permits have been issued to the super majors. Before Macondo, 60% of permits were issued to independent oil companies.
Going Forward in the Gulf of Mexico
There are an estimated 3.8 million barrels of undiscovered technically recoverable oil and 36.9 trillion cubic feet of undiscovered technically recoverable natural gas in the Atlantic, including GOM. With such large potential resources, it is expected oil and gas companies will continue to pursue exploration and production in this region for years to come.
Clover specializes in placing professionals in the oil and gas industry. If you are an Operator seeking to augment Project Teams, contact Jeff.W@clovergs.com
If you are an experienced professional looking for opportunities in the Upstream Industry (Alaska, Eagle Ford Shale Play, Bakken Formation, Deepwater Gulf of Mexico), send your resume in complete confidence to Chris.S@clovergs.com