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16 comments on USA Gulf of Mexico Oil Production Forecast Update

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ace on February 9, 2009 - 8:29pm Permalink | Subthread | Parent | Comments top

Plantagenet,

My analysis excludes Gulf of Mexico, west of Florida. If this acreage is opened up and discoveries made then first oil might happen in five to ten years which will help production.

I do include some additional oil yet to be found in the GoM in my analysis as the total ultimate recoverable reserves (URR) number used is 23 billion barrels (Gb). This means that remaining URR as at October 2008 is 6.6 Gb which is greater than the EIA's proved reserve number of 3.5 Gb as at December 2007. This difference of about 3 Gb gives some allowance for future oil discoveries.

If you want some wishful optimism you can refer to this 2006 report done by the same Department of the Interior that made the optimistic GoM forecast in my second chart.
http://www.mms.gov/revaldiv/PDFs/2006NationalAssessmentBrochure.pdf

The 2006 report states that total endowment of recoverable oil from the GoM including Florida is 71.91 Gb which is three times my estimate. The table below shows that future reserves appreciation and future discoveries are a huge 51.8 Gb of the total endowment. Since 2003, reserves appreciation and discoveries have not been enough to replace production losses as shown by my last chart above from the EIA.

Part of the justification of my estimate of URR 23 Gb for the GoM is the prediction by the Hubbert Linearization technique as shown below.
http://en.wikipedia.org/wiki/Hubbert_Linearization

click to enlarge

I also use this older and probably more realistic 1999 report (186 pages) from the Dept of the Interior, Minerals Management Service.
http://www.gomr.mms.gov/homepg/offshore/gulfocs/assessment/MMS990034-a.PDF

It says that the GoM total endowment, including Florida, is 23.34 Gb as on page 128:

The Gulf of Mexico Region total endowment ranges from 21.037 to 26.137 Bbo and 258.845 to 286.808 Tcfg (67.627 to 76.399 BBOE), at the 95th and 5th percentiles, respectively, with mean estimates of 23.343 Bbo and 272.183 Tcfg (71.775 BBOE).

If discoveries are made in the Florida part of GoM then I sincerely hope that the GoM URR will increase beyond 23 Gb.

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Pragmatic on February 10, 2009 - 12:18am Permalink | Subthread | Parent | Comments top

HI Ace,
One of the reasons the MMS estimates for GOM oil are so high is that they've increased the UUR to 60%, which you can see at

http://www.mms.gov/offshore/

This is completely unrealistic by a factor of 2 or 3. I've got a question about the 1999 assessment you list above. In it, they talk about 4,658 pools (pg 148 of the PDF) of oil in about 50 plays and 876 to 924 fields. I've been trying to get a map of where the pools and field are supposed to be to estimate the number of rigs that would be required (cost and timescale) to recover the oil. Have you any idea about their distribution and how many rigs and wells it would take to tap into the supposed reserves? I’ve filed a FOIR because they have been unresponsive.

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Gail the Actuary on February 10, 2009 - 2:25am Permalink | Subthread | Parent | Comments top

I don't think we have a good answer as to why MMS has produced what seem to be such unrealistic production estimates. It seems like the likely reason was that this was the politically desired outcome. It was in 1998 that the IEA (the international organization) made its projection of world oil supply that took into account peak oil considerations. When the USA came up with its optimistic estimates of remaining reserves (not just in the Gulf of Mexico, but in the world as a whole), the IEA dropped its comments about peak oil in its forecasts, and made forecasts based solely on demand. The US EIA has produced optimistic forecasts as long as one can remember, and the high reserve numbers may have helped support these forecasts.

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16 comments on USA Gulf of Mexico Oil Production Forecast Update

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