Energy Highlight of the Week
Source: U.S. Energy Information Administration, Natural Gas Monthly
U.S. natural gas production in the Gulf of Mexico has been on the decline for almost 20 years, but new projects in the region are expected to reverse this trend. Ten new natural gas production fields are expected to begin producing natural gas in 2018 and another eight are will start producing gas in 2019. Across all 16 projects, a combined natural gas resource of 836 billion cubic feet is estimated. Back in 1997, when the Energy Information Administration started collecting Gulf of Mexico production data, the region averaged 14.3 Bcf per day, accounting for 26% of the United States’ total annual marketed natural gas production. Through August 2018, the Gulf of Mexico averaged just 2.6 Bcf/d, or 4%, of total U.S. production. This decline was mostly caused by a drop in the number of natural gas wells operating in the Gulf, which fell from 3,271 in 2001 to 875 in 2017. Because extracting natural gas and oil from the seabed is extremely expensive and resource-intensive, onshore drilling gradually became more economically efficient than offshore drilling. The new projects are the first in the Gulf of Mexico since 2016, when five projects in the Mississippi Canyon and Green Canyon protraction areas added 1,429 Bcf of natural gas resources. 12 of the 16 new projects will be located in those same two protraction areas, while the remaining projects are located in the Western or Eastern Gulf of Mexico planning area.