Oil, gas production declining in Gulf of Mexico federal waters, report says

By Jennifer Larino, | The Times-Picayune 
on July 08, 2014 at 12:40 PM
Oil and gas found off the coast of Louisiana and other Gulf Coast states made up almost one quarter of all fossil fuel production on federal lands in 2013, reinforcing the region’s role as a driving force in the U.S. energy industry, according to updated government data. But a closer look at the numbers shows the region’s oil and gas production has been in steady decline for much of the past decade.

A new U.S. Energy Information Administration
report shows federal waters in the Gulf of Mexico in 2013 accounted for 23 percent of the 16.85 trillion British thermal units (Btu) of fossil fuels produced on land and water owned by the federal government. That was more than any other state or region aside from Wyoming, which has seen strong natural gas production in recent years.

The report did not include data on oil and gas production on private lands, which makes up most production in many onshore oil and gas fields, including the Haynesville Shale in northwest Louisiana.

But production in the offshore gulf has also fallen every year since 2003. According to the report, total fossil fuel production in the region is less than half of what it was a decade ago, down 49 percent from 7.57 trillion Btu in 2003 to 3.86 trillion in 2013.

The report notes that the region has seen a sharp decline in natural gas production as older offshore fields dry out and more companies invest in newer gas finds onshore, where hydraulic fracturing has led to a boom production. Natural gas production in the offshore gulf was down 74 percent from 2003 to 2013.

The region’s oil production has declined, though less drastically. The offshore gulf produced about 447 million barrels of oil in 2013, down from a high of 584 million barrels in 2010.

Still, the region accounted for 69 percent of all the crude oil produced on all federal lands and waters last year.

Crude oil production in the Gulf of Mexico could to start to recover in coming years, as companies restart major projects delayed after the 2010 Deepwater Horizon rig explosion. The disaster killed 11 men, unleashed the worst oil disaster in U.S. history and prompted a federal ban on deepwater drilling. The ban lasted several months.

The most recent federal lease sale held in New Orleans, in March, drew more than $872.1 million in high bids on more than 1.7 million offshore acres in the central and eastern Gulf of Mexico. Previous sales under President Barack Obama administration’s 2012-17 leasing program have opened 60 million acres offshore and drawn $1.4 billion in bid revenues.
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