Oil production spikes through 2016, but then reaches a plateau, analysis finds.
By Daniel J. Graeber Follow @dan_graeber Contact the Author
Gulf of Mexico oil production could start slow decline after 2016, analysis from Wood Mackenzie finds. UPI/A.J. Sisco.
HOUSTON, Nov. 14 (UPI) -- Energy consultant group Wood Mackenzie said it expects U.S. Gulf of Mexico oil production to enter a period of decline after peak output is reached in 2016.
New fields -- Heidelberg and Jack/St. Malo -- should boost output from the Gulf of Mexico with 115,000 barrels of oil equivalent in new production by 2016. Overall production, including the expansion of older fields, means output from the Gulf of Mexico will pass a peak first set in 2009.
"We expect production from 2014 to 2016 to grow 18 percent annually," analyst Imran Khan said in a Thursday statement.
After that, the analyst group said a steady level of investment will be needed to sustain production from the gulf basin. Several new discoveries have been made in deeper waters, where development can cost as much as three times higher than elsewhere in the region.
In Khan's analysis, capital spending next year will be 30 percent higher than in 2013. After hitting a peak production rate in 2016, production should at best plateau for the rest of the decade.
"The current slide in oil prices does not help the long-term outlook either, especially if the downward trend continues for a prolonged period," the analysis reads.
The assessment follows a report from the International Energy Agency stating U.S. shale output should level off by the 2020s, after which Middle East producers return to dominance.
IEA's report this week said the "apparent breathing space" from rising U.S. oil production offers little reassurance long term given the long lead times for new developments. While U.S. shale diversifies the market now, the Paris-based agency said the global economy of the future will rely on only a few producers.