The recent downturn in crude oil prices isn’t expected to have much of an impact on Gulf of Mexico production, according to a report from the U.S. Energy Information Administration.
FuelFix.com reports the agency projects crude oil production will will grow to 1.61 million barrels per day in 2016. By 2016, the Gulf will account for about 17% of total U.S. crude production.
U.S. onshore production is expected by many to plateau or increase slightly in 2015. Thus far, production has continued to grow despite steep cuts to budgets due to cheaper oil. Onshore projects often progress from investment to production in much shorter cycles, so a cut to investment translates quickly into less production.
Offshore production, which involves much larger investments made over a longer time, doesn’t respond as quickly to a drop in the price of crude. Developments in the Gulf continue to stream online.
Five projects began producing in the final months of 2014 and 13 fields are expected to start up by 2016. By the end of 2015, the new projects are expected to add 265,000 barrels per day to production in the Gulf.
Lower crude prices have driven some producers to postpone or delay investments in a small number of offshore investments. Producers are most likely to cut projects in the early investment stage, according to the EIA. Oil in recent days has been trading at around $50 per 42-gallon barrel.
