Greenfield sanctioning to support production growth in the Gulf of Mexico
November 2019

Greenfield sanctioning to support production growth in the Gulf of Mexico


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Production from the US offshore has been growing over the last five years primarily as a result of low decline rates on mature fields and a focus on infill drilling. Going forward, the region’s supply is expected to be supported by the sanctioning of new projects, as operators invest into the increasingly more competitive deepwater developments. This article assesses the outlook for the United States offshore, illustrated by three key drivers: supply, resource potential from new projects and capital investments.

A chart showing the US liquids and gas supply from shale formations and spudded shale wells from 2006 to 2012. Source: UCube from Rystad Energy, July 2019Figure 1 shows total production from the United States Gulf of Mexico (GoM), from 2010 to 2025. Production in the region has been growing since 2014, reaching around 2.3 million boe/d in 2018 (almost 80% oil). Deepwater volumes accounted for around 85% of the total production last year. Low decline rates on mature fields driven by infill drilling activity have contributed to the production growth. Moreover, the offshore landscape in the United States had historically been dominated by the majors, and the share of production operated by BP, Chevron and Shell is expected to surpass 50% going forward. This year, production is expected to grow to nearly 2.4 million boe/d with the additions coming primarily from deepwater projects. Post 2020, however, we may see a more stable trend in the region’s supply, driven by lower sanctioning activity in the recent years, particularly in 2016 and 2018. Going forward, the region’s production will be supported by increasing contributions from new projects, with lower cost of new developments paving the way for new FIDs.

A bar chart showing the year-over-year oil production additions split by top US shale and tight liquids plays. Source: UCube from Rystad Energy, July 2019Figure 2 depicts total recoverable resources for the top ten oil discoveries expected to have FID in the next ten years in the Gulf of Mexico. Selected fields, all of which are offshore discoveries, are also split according to the company operating the field. The largest oil discovery awaiting to be sanctioned by the end of 2021 is the Chevron-operated ultra-deepwater Ballymore field with over 500 million barrels of oil reserves. The second largest ultra-deepwater discovery, Whale, is developed jointly by Shell and Chevron, and is estimated to hold about 400 million boe of reserves. The field is expected to be sanctioned by the end of 2020. All top discoveries displayed have more than 150 million boe in reserves, providing substantial support for the future production in the region. Furthermore, it should be noted that nine of the ten top oil discoveries to be sanctioned are operated by majors. Discovered in 2009 by Anadarko, Shenandoah is the only project in the selection that is currently operated by an exploration company LLOG. Amid depletion in conventional onshore reserves, the deepwater segment becomes more important than ever, taking a significant share in majors’ portfolios. Specifically, offshore deepwater developments in the region constitute about 20% of majors’ total remaining reserve base. Overall, Rystad Energy expects offshore sanctioning to increase in the medium term with Gulf of Mexico being one of the primary contributing regions. We thus estimate growth in investments in this sector, which in the longer term will have a positive impact on production and revenues of both E&P and OFS companies.

A bar chart showing the year-over-year gas production additions split by top US shale gas plays. Source: UCube from Rystad Energy, July 2019

Figure 3 depicts total capital investments in the United States Gulf of Mexico by life cycle of the projects included. Investments peaked in 2014 at $22.5 billion, decreasing significantly over the next five years to around $11 billion expected for 2019. The spending levels are forecasted to stay around the same level next year and to start growing from 2021 when new projects are expected to see growing investments. Significant contributions will come from recent deepwater discoveries, including Ballymore (2018) and Whale (2017), as well as the 2014 Anchor and Leon discoveries. The Ballymore field was discovered by Chevron and Total in September 2018 and is slated for sanctioning for the second half of 2021. The final investment decision on the Anchor development is expected later this year or early next year. The growth in investments post 2023 will be supported by the sanctioning of the Tiber (BP-operated) and Dover (Shell-operated) fields, as well as exploration potential from awarded acreage.


Production in the Gulf of Mexico region has been on increasing trend since 2014 and is estimated to reach 2.4 million bpd in 2019. One of the industry lowest decline rates on mature fields have been supporting the production in the region to date. In addition, in the medium term we expect greenfield sanctioning to pick up, which is expected to drive production growth in the Gulf of Mexico in the future.