(Chron) Oil and gas production could reach an all-time high in the deep waters of the Gulf of Mexico this year as companies cut costs and spend less on exploration.
Deepwater output in the Gulf could climb to 1.9 million barrels of oil equivalent in 2018, a 13 percent increase above last year and 10 percent higher than the last peak in 2009, energy research firm Wood Mackenzie said in a new report this month.
Gulf operators have dramatically cut costs in recent years and are pumping oil and gas more efficiently after adopting new automated drilling technologies, the firm said.
“Although deep-water Gulf of Mexico has taken quite a beating over the last three years, the industry has clawed its way back to being competitive,” said William Turner, a senior research analyst at Wood Mackenzie.
Last April, Wood Mac said the cost of deep-water projects have fallen by a fifth on average since crude prices collapsed in the summer of 2014, because of lower rig prices and moves to redesign projects and pump higher quantities of oil from wells.
But oil and gas exploration around the world will continue on the backburner, which could make the region’s current oil-production levels unsustainable in coming years.
Wood Mac believes exploration in the Gulf of Mexico will remain flat this year.
“Increased investments in exploration and development, especially in ultra-high-pressure high-temperature technologies and projects, are crucial,” Turner said, “not only to maintaining the current pace of production but also in unlocking the next phase of significant volumes in the region.”