EIA Finds Resurgence in Offshore Oil Production – 11/1/16

Although onshore oil production gets more attention, especially after the surge in shale oil output that caused the recent price collapse, offshore oil continues to play a big role in oil’s future.

Globally, offshore oil production accounted for about 30% of total oil production over the past decade, according to the EIA.

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A significant amount of global offshore production is concentrated in a few countries. In 2015, 43% of all offshore oil production came from five countries: Saudi Arabia, Brazil, Mexico, Norway, and the United States.

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Saudi Arabia is responsible for 13% of the world’s total offshore production making it the largest producer of offshore crude oil followed by Brazil, which saw its offshore production grow by 58% between 2005 and 2015. Mexico and Norway have seen steady to falling production from offshore sources for the same time period.

The U.S. has seen relatively strong production in the Gulf of Mexico between 2005 and 2015 with offshore production gains of 6.5%. Several large projects coming online in 2016 and 2017, Gulf of Mexico production is expected to increase by about 100,000 b/d in 2016 and an additional 200,000 b/d in 2017. However, U.S. onshore production is expected to fall by 800,000 b/d in 2016 and an additional 300,000 b/d in 2017.

Advancements in drilling technology have also made previously unreachable deepwater prospects viable. Most offshore production is in shallow waters, but there has been a move toward deepwater projects. Still, the greater time and investment involved in deepwater projects has meant most nations with offshore assets operate only in shallow water.

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Global offshore oil production from deepwater projects reached 9.3 million barrels per day (b/d) in 2015, up 25% from a decade ago. Changing economics and the exhaustion of some shallow offshore resources has helped to push producers to deepwater resources, particularly in Brazil and in the Gulf of Mexico.

The majority of deepwater production occurs in four countries: Brazil, the United States, Angola, and Norway. Brazil in particular has significantly increased its deepwater production. While the U.S. has expanded operations in the Gulf of Mexico, Brazil has been focusing on presalt resources found under thick layers of salt at extreme depths of more than 1500 meters as illustrated by the rising share of its crude production coming from ultra deep sources.

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