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OWOE - Oil And Gas - How has deepwater development changed the energy picture in the US?
  Figure 1 - US Yearly Production of Crude Oil (EIA)
 
Figure 1 - US Yearly Production of Crude Oil (EIA)
 
Figure 2 - Shell Auger Tension Leg Platorm
 
Figure 3 - Gulf of Mexico Production of Crude Oil (EIA)
 
How has deepwater development changed the energy picture in the US?
Topic updated: 2024-11-17

Figure 1 shows total US crude oil production (per the EIA) throughout history up to current (2023) levels. Production peaked temporarily in 1970 at about 9.2 million barrels per day average during the year. Production began dropping as the old, established oil fields went into natural decline. At the same time demand was growing rapidly during the good economic years in the 1980s. As a result, imports of foreign oil began rising and reached a peak of approximately 6.5 million barrels per day in 1979. That was the year of the Iranian Revolution and second OPEC oil embargo that had a significant effect on the economy, triggered a recession, and led to a decrease in total crude oil usage for several years.

During that period, two new significant sources of oil were brought on stream, primarily offshore in shallow water in the Gulf of Mexico and the North Slope of Alaska. Alaskan oil production peaked in 1988 at approximately 2 million barrels per day, while Gulf of Mexico production kept relatively steady at approximatley 1 million barrels per day from the mid-1980s through the mid-1990s. Despite that, US production began to sharply decline in 1985.

But a new oil play was emerging in the Gulf of Mexico that would change the energy picture in the US and slow the rapid decline. A number of oil companies, led by Shell Oil, utilizing new technology in the form of floating drilling and production systems, began developments in waters that eventually exceeded 1 mile deep. Although there had been several marginally successful deepwater developments earlier, the start of the deepwater era is generally taken as installation of the Shell Auger Tension Leg Platform (TLP) in 1993 (see Figure 2). Shell and many other oil companies have since installed a variety of different systems (see OWOE: What are the different types of offshore deepwater platforms?) and have successfully extended deepwater technology to extremely deep water both in the Gulf of Mexico and internationally.

Figure 3 shows daily average oil production (per the EIA) for the US Gulf of Mexico, respectively. The rise in Gulf of Mexico production starting in the mid 1990s has been driven by these deepwater developments, with new fields being developed consistently to replace declining reserves from the older fields. Offshore production reached 1.5 million barrels per day in 2001, held relativley steady for two decades, then increased again to a level approaching 2 million barrels per day. This represents approximately a 100% increase over the pre-deepwater days.

Despite the significant increase in offshore production driven by the deepwater, total US production continued to fall until the mid 2000s when fracking and horizontal drilling technology opened up significant shale oil reserves onshore. See OWOE: What is hydraulic fracturing (fracking)? and OWOE: How has fracking changed the energy picture in the US? Currently (end 2023), offshore production makes up about 14% of total US oil production.


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