While I'm not Halfin, I can say that there's a difference between having excess capacity and having excess capacity of light sweet crude. As was noted in an earlier article, light sweet crude may have already peaked.

Other than that, can anybody tell me what kind of crude is produced in the area?

That's a good question. Crude oil, as has been discussed on this board, comes in different grades. Light sweet oil is best for producing gasoline. Heavy sour (high sulfur) oil produces less gasoline unless extra processing steps are taken, which many refineries are not set up for. Here is an article about a company that specializes in refining sour crude and is making big profits as a result, as the sweet/sour price spread has greatly increased lately [Econbrowser link].

I have learned that the Gulf of Mexico produces both sweet and sour grades. The better grades are called Louisiana Sweet, both heavy (HLS) and light (LLS). The sour crude is called Mars. There are separate pipelines for dealing with the different grades and separate refining facilities. I haven't found any figures on the mix or percentage production of the two grades. It may vary depending on market demand.

Another thing I learned is that most OPEC crude is relatively sour. Saudi Arabian oil is light sweet but most of the rest of the oil producing countries don't have such high grades. Mars, the sour crude from the Gulf, is pretty comparable to Dubai crude and also similar to the North Slope Alaskan crude. There's a lot of sour oil in the world, most of it is not the champaigne that comes out of Saudi sands. It's a mistake to think that sour oil is no good. It is still usable, it's just not as nice as the sweet grades. That's one reason for the increase in the price difference, as the sour gets cheaper it becomes more economical as a substitute for sweeter grades. It's about $15 less per barrel now.

The bottom line is that most places don't produce oil as light and sweet as Saudi Arabia, and that probably includes the gulf. I gather that a substantial part is the sour Mars grade. The Strategic Petroleum Reserve is about 2/3 sour and 1/3 sweet, and that is probably not too different from the mix of crudes produced domestically in the U.S.