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U.S. ENERGY INFORMATION ADMINISTRATION Deeper Wells and Faster Project Development Marks Offshore Natural Gas ProductionDramatic advances in drilling technology have tripled the water depth record for gas or oil production from 1,760 feet in 1989 to 5,376 feet in 1997. Further advances are expected because operators already have drilled in depths exceeding 7,000 feet. Technology advances in the gas and oil industry also have lessened the time between discovery and initial production for offshore projects, which enhances the expected economic returns. Improvements for deep-water prospects have been especially impressive, declining from 10 years for a discovery in 1984 to roughly 2 years for fields discovered in 1996 (Figure 1). However, the near-term outlook for offshore gas production may suffer as a result of the low 1998 gas prices which have been caused in part by the plummet in crude oil prices, according to "Offshore Development and Production," an analysis released today by the Energy Information Administration. Although 1998 offshore production is not expected to show a substantial drop, the cumulative impact of decreased drilling and other support work during the year may be substantial. A low-supply scenario suggests that offshore gas production in 2002 could decline by almost 30 percent from the 1997 level. A high-supply scenario using more optimistic assumptions indicates that gas production in 2002 could rise by 39 percent from 1997 levels. Over the longer-term, prospects for gas supplies from the offshore show potential for substantial growth. Recoverable gas resources in undiscovered fields in the Federal waters of the Gulf of Mexico were estimated to be 96 trillion cubic feet (Tcf) as of the end of 1995, with an additional 37 Tcf to be proven in already known fields. Combined with the 29 Tcf already in proved reserves for this area, this is equivalent to the 1997 estimate of 165 Tcf in proved reserves for the United States as a whole. Recovery of this huge resource depends on the underlying technology and economics. In addition to developing new technology, companies have directed their efforts at improving potential profitability by aggressively managing costs, accelerating project development, and increasing well productivity. The realization of current prospects will require expansion of necessary infrastructure, such as production platforms and transportation capacity, which will provide additional economic advantages because those assets can be shared among projects. Other highlights from this analysis include:
This analysis is contained in the third released chapter from an upcoming report, Natural Gas 1998: Issues and Trends, expected to be published in April 1999. This chapter may be accessed electronically from EIA's World Wide Web Site at: http://www.eia.doe.gov/oil_gas/natural_gas/analysis_publications/natural_gas_1998_issues_and_trends/it98.html. Printed copies of the full report will be available from the U.S. Government Printing Office (202) 512-1800 or through EIA's National Energy Information Center (202) 586-8800.
EIA Program Contact: William Trapmann, 202/586-6408 EIA-99-04 Contact:
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