EIA estimates drilling ban's impact on gulf production

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, June 8 -- Production of oil from the US Gulf of Mexico will drop by an average 26,000 b/d during the fourth quarter and roughly 70,000 b/d during 2011 as a result of the Obama administration’s 6-month moratorium on deepwater drilling, the US Energy Information Administration forecasts.

Production from the deepwater gulf will decline by an estimated 2.4 million bbl in 2010 and 25 million bbl in 2011 because of the moratorium, EIA said as it issued its latest short-term energy outlook on June 8. US President Barack Obama ordered the suspension of deepwater drilling on May 27 after receiving an initial report and recommendations from Interior Sec. Ken Salazar concerning the Apr. 20 well blowout, rig explosion, and subsequent oil spill.

EIA said it expects oil production declines from the gulf to accelerate from a monthly average of about 9,000 b/d in September to 80,000 b/d by December 2011. It reduced its forecast of total US crude production in 2011 by 20,000 b/d to 5.38 million b/d, or about 110,000 b/d less than in its previous monthly forecast.

It also reduced its estimated 2010 production growth estimate to 70,000 b/d, also 110,000 b/d less than in its May 11 forecast. EIA said this was primarily because of the National Oceanic and Atmospheric Administration’s forecast of more hurricanes this year. It estimated a median of 26 million bbl of shut-in crude production and 166 bcf of shut-in gas this year in the gulf because of tropical storm activity. “Actual shut-ins are likely to differ significantly from this expectation depending on the number, track, and strength of hurricanes as the season progresses,” it added.

Oil prices fluctuated during May, with the spot price for West Texas Intermediate ranging from a high of $86/bbl on May 3 to a low of $65/bbl on May 25 before ending the month at $74/bbl, according to EIA. It said that uncertainty over the global economic recovery, particularly with respect to Europe’s debt crisis and the tightening of credit by China, and liquidation of futures contracts may have contributed to the decline.

WTI prices also fell further than those of most other crudes because of record high inventories at Cushing, Okla., EIA said. It projected WTI spot prices averaging $79/bbl in 2010 and $83/bbl in 2011, both about $3 lower than its forecast a month earlier.

Contact Nick Snow at

To access this Article, go to: