Future of Drilling in the Gulf of Mexico
Although offshore drilling in the Arctic Ocean is slowing, analysts see no evidence that drilling in the Gulf of Mexico will slow and, in fact, believe it will grow in the coming years. Last October, the Obama Administration cancelled its plans to sell new oil and gas leases in the Arctic. The move followed lackluster interest by potential drillers and Shell’s failed multi-billion-dollar effort to find crude there. Last week Shell announced that it would relinquish all but one of its leases in the area.
This decline in activity contrasts the robust interest in oil and gas production in the Gulf of Mexico, where there are more than 5,000 active oil and gas leases, the majority of which are for deep water drilling. The Gulf supplies about 17% of crude oil in the United States, and that number may increase. Some analysts expect oil and gas production in the Gulf to hit a record of 1.82 million barrels per day in late 2016 and 2017. The Bureau of Ocean Energy Management is finalizing a 5-year leasing plan with additional lease sales for offshore oil exploration in the Gulf from 2017 to 2022.
Analysts attribute the stronger activity in the Gulf, and the expectation for continued growth, to the well-developed infrastructure already in place. Offshore drilling in the Gulf dates back to 1938, when the first oil rig was set up off the coast of Creole, LA, by a predecessor of ExxonMobil. Because of this infrastructure, offshore oil development in the Gulf is more sheltered from fluctuations in the price of oil and can withstand downturns better than other drilling locations