The Revival of the Gulf Coast, USA

The deep waters of the Gulf of Mexico are filled with an abundance of the natural treasure of oil and gas. In fact, it is solely held accountable for 23 percent of the total U.S. crude oil and natural gas production.

However, in recent years production receded due to a catastrophic event that occurred at the Macondo Prospect of the Gulf four years ago in April. The Deepwater Horizon rig explosion changed U.S. history and created ripples throughout the offshore drilling industry. Waves of shock echoed throughout the nation as 11 workers were killed, 16 injured, and over 200 million gallons of oil leaked from a damaged well. As a result of the tragedy, a six-month moratorium was put in place by the U.S. government that suspended deepwater drilling along the Gulf Coast entirely.

After the ban had lifted, stricter requirements were put into place to prevent a reoccurrence of the rig explosion. These events factored into the slow movement of oil activity along the Gulf Coast for the past few years.

There are now close to 60 deep-water drilling rigs operating in the gulf. However, production across the region remains almost 20 percent below what it was when the moratorium began.

BP, a leading company in the production of oil and gas, was held responsible for the 2010 rig explosion and was suspended from bidding on federal contracts by the U.S. Environmental Protection Agency (EPA), after the matter. After re-establishing confidence among investors and cleaning up the costs of legal fees, BP has been working with the EPA and progress has been made to lift the suspension order. The company was adamant to continue building and investing in platforms located in the Gulf Coast. It was the biggest producer there in 2012 and had ownership stakes in more than 650 leases. BP’s most recent launch in February was that of Na Kika Phase 3 located 140 miles southeast of New Orleans. BP has taken on this venture by partnering up with Shell; each company claiming a fifty percent share. Na Kika is the company’s first semi-submersible platform and phase 3 has an estimated cost of 1.4 billion dollars. Na Kika Phase 3 will bring in new technology to enhance oil production at record-breaking amounts by 2016.

Another leading company in the oil and gas industry, Chevron, has also set its sights on developing investment in the Gulf Coast on the Jack and St. Malo oilfields, located 40 kilometers apart. Chevron plans to drill ten wells on the oilfields; four located at Jack and six located at Malo. The Jack/St. Malo platform is set to reach 177,000 barrels of oil equivalent per day and begins production in 2014. Chevron holds 51 percent of the share and is partnered with Statoil, Exxon Mobil, and ENI for the remaining. Exxon Mobil did not show much interest in investing in the Gulf in previous years, but it has recently begun exploring the depths of the deep sea. The company is focusing on a 4 billion dollar project in the Julia field, which lays 30,000 feet deep, in hopes of spawning oil production for 2016.

After a momentary pause, oil production along the Gulf of Mexico has resumed. Not only are long-term invested companies remaining dedicated to the area, new companies are acknowledging the endless possibilities the Gulf Coast could provide.

With each year that passes, barrel equivalency per day drilled from the wells in the Gulf of Mexico is on the rise. With increased productivity and company investment, by 2020, the Gulf is expected to reach 1.9 million barrels per day.

As an alternative to onshore hydraulic fracturing, deep sea drilling has become a target for companies looking to explore and develop offshore platforms. After a four-year period of reconstruction and renovation, the revival of offshore drilling looks lucrative and promising!.