2016 record year for oil production in Gulf of Mexico

U.S. crude oil production in the Gulf of Mexico reached 1.6 million barrels per day in 2016, which was 44,000 more barrels per day than in 2009, the year with the previous high, according to the U.S. Energy Information Administration. In January, oil production rose to 1.7 million barrels per day, and it was the fourth consecutive month production increased. Production in the Gulf of Mexico is expected to rise through 2018.

In 2016, production started at eight projects in the Gulf of Mexico, leading to the higher production levels. Seven projects are expected to start production by the end of 2018, according to the EIA. “Based on anticipated production levels at these new fields and existing fields, annual crude oil production in the (Gulf of Mexico) is expected to increase to an average of 1.7 million barrels per day in 2017 and 1.9 million barrels per day in 2018.”

Oil production in the Gulf of Mexico is “less sensitive to short-term oil price movements than onshore production in the lower 48 states” because of the amount of time required to complete offshore projects. For example, the number of rotary rigs, including gas and oil, has declined since crude oil prices started rising in November after the Organization for the Petroleum Exporting Countries announced it would cut production.

But long-term trends have impacted production in the Gulf of Mexico, such as when the spot price of Brent crude oil started falling in 2014. The number of rotary rigs declined to 22 in 2016, from an average of 55 in 2014. “The number of development and exploratory wells has fallen in each year since 2012,” according to the EIA. “Although the number of operating rotary rigs in the (Gulf of Mexico) increased from 2012 to 2014, falling crude oil prices in 2014, along with drilling delays caused by the 2013 discovery of faulty rig safety equipment, led to decreasing drilling activity in that period.”