US Gulf of Mexico, the country’s primary offshore source of oil, is quickly becoming a contested ground for oil, carbon sequestration, and renewable energy, say analysts. Oil and gas output in the Gulf is expected to increase by 17% to a record 2.6 million barrels of oil equivalent per day (boepd) by 2025, up from 2.2 million boepd this year, according to projections by consultants Wood Mackenzie. This reflects a flurry of new platforms from Shell, BP, Chevron, and others that were budgeted before the pandemic hit global demand and made companies reduce investments.
Despite the growth in oil development, some companies such as Exxon Mobil, Occidental Petroleum, and Talos Energy have been selling off assets in the Gulf and targeting capturing and storing carbon dioxide and other greenhouse gases underground. Carbon capture and storage (CCS) has already attracted new investment as companies buy sites to store CO2 from oil refiners, chemical makers, and liquefied natural gas (LNG) producers.
CCS “will certainly become an important part of the business activity” in the basin, said Wood Mackenzie research analyst Scott Nance. Oil development will still dominate the basin but should coexist with CCS and renewables such as offshore wind and solar. Nearly a quarter of the presentations at this year’s Offshore Technology Conference (OTC) will involve offshore wind, renewables, carbon capture, and energy transition, according to the conference’s organizers.
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Next year, Shell and Chevron aim to start their 100,000 boepd Whale project, while Chevron is completing commissioning for its 75,000 bpd Anchor project. LLOG Exploration and Repsol plan the Salamanca platform that will pump 60,000 bpd of crude by mid-2025. Shell expects to add 100,000 boepd from new platform Vito, and BP will add 140,000 boepd from Argos, its first new platform since the Deepwater Horizon oil spill 15 years ago.
Drilling, well completions, and reservoir engineering will make up just 15% of the OTC panels this year, while decommissioning and life extension – oil projects nearing their end – will be the third largest grouping. In contrast, wind, renewables, carbon capture, and energy transition make up 24% of OTC panels this year.
The Gulf of Mexico will continue to play a significant role in the US oil industry, but carbon capture and renewable energy will increasingly share the space with oil and gas development. With the shift towards decarbonization, companies are investing in technologies that reduce emissions and increase sustainability, making the Gulf an attractive location for CCS and renewable energy projects.
