MMS: US depends on deepwater Gulf of Mexico for energy future

Deepwater development in the Gulf of Mexico is the engine driving new US energy production, says the US Minerals Management Service in a new report titled, Deepwater Gulf of Mexico: America�s Emerging Frontier. The MMS report heralds the arrival of "the new frontier for resource management" and chronicles the unfolding of the deepwater Gulf of Mexico as a major world petroleum province.


Deepwater development in the Gulf of Mexico is the engine driving new US energy production, says the US Minerals Management Service in a new report titled, Deepwater Gulf of Mexico: America�s Emerging Frontier.

The MMS report heralds the arrival of "the new frontier for resource management" and chronicles the unfolding of the deepwater Gulf of Mexico as a major world petroleum province. The deepwater gulf has emerged as a world-class oil and gas province and is a major source of economic growth and energy supply for the US, says MMS Director Walt Rosenbusch.

"Advanced technology is digging deep to explore ways to enhance the nation�s energy resources and economy," said MMS.

MMS defines deep water as 1,000 ft or more.

Growth province
In the early 1990s, some industry observers considered the Gulf of Mexico a �dead sea� in terms of petroleum production. "Most of the early indicators pointed to an oil and natural gas basin nearing the end of its productivity," said MMS. "Many thought the Gulf would only attract the small investor, and there appeared to be little potential for new discoveries."

The gulf, however, has reemerged as an area of major importance, a key US energy source. This is due to a blossoming in exploration successes in the gulf's deepwater areas.

There are about 7,600 active leases in the Gulf of Mexico today, 48% of which are in deep water. In 1992, there were 5,600 active leases, only 27% of which were in deep water. By the end of 1999, 30 deepwater gulf fields were producing, up 30% vs. 1998.

"Advances in deepwater drilling and production technology are as remarkable as the strides made in the space industry," said Rosenbusch. "Exploratory drilling and production in the western and central portions of the northern Gulf of Mexico have steadily increased. Deepwater is driving the new millennium.

"The march towards deepwater exploration and production has also significantly expanded the [US] government�s responsibilities. Deepwater activities represent a new set of regulatory challenges for the MMS."

Technology's role
It is the MMS's job to manage the development of Outer Continental Shelf mineral resources in a safe and environmentally sound manner. "Accomplishing this in deepwater brings us to a new frontier, not only for technology but also for resource management," said Rosenbusch.

New technology and high-production-rate wells have lowered the costs of finding, producing, and delivering deepwater oil and natural gas to market, says MMS. Areas of the gulf once thought beyond reach�water depths greater than 5,000 ft�are now being explored and developed successfully. A new generation of drillships and techniques allows drilling in water as deep as 10,000 ft.

More than 40% of rigs capable of working in deep water are either working in the Gulf of Mexico or committed to do so, says MMS.

US's energy future
Deepwater production will continue to rise, playing a key role in the US's national energy strategy, according to the agency. The Gulf of Mexico's deep waters are now responsible for more than 50% of total gulf oil production. That milestone was reached just last year.

In 1990, about 4% of gulf OCS oil production, and less than 1% of OCS gas output, was from deepwater areas. By the end of 1999, those figures had risen to more than 50% for oil and 20% for gas. This is a 2,800% increase in oil produced from those water depths during the 1990s and a 3,500% increase in natural gas production, said MMS.

In the early 1990s, Gulf of Mexico oil output was 300-315 million bbl/year. It has since risen to almost 500 million bbl in 1999.

"This is due in part to more accurate methods to locate hydrocarbon deposits in deep water and beneath salt formations in the seabed, coupled with less-costly means of developing these properties," said MMS.

The agency says the potential for sustained, long-term activity levels in the gulf looks promising. "Operators are developing more sophisticated and cost-efficient deepwater technology that will enable the United States to stem the tide of dependency on foreign oil."

Production potential from deepwater reserves is estimated at about 2 billion bbl of oil and 6 tcf of gas. "These figures are significant," said MMS. "With the fluctuation in oil prices, it is reassuring to know that domestic production is growing at a steady rate in the gulf�s deepwater areas."

This increase in activity also benefits society by the jobs it creates in areas ranging from computer technology to steel manufacturing. Nearly 37,000 jobs are directly dependent on the Gulf of Mexico offshore oil and natural gas industry, says MMS.

"Deepwater development is the engine driving new energy production in the US," said Rosenbusch. "It has emerged as a world-class oil and gas province and is a major source of economic growth and energy supply for all Americans.�

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