Gulf of Mexico drilling recovery accelerates
Confidence is rising amid an uptick in deepwater permits and the proving of potentially transformative technologies
After four years of declining drilling, Gulf of Mexico (GOM) permits are up, rig utilisation is increasing and there is cautious optimism. Although oil price gains have levelled off, cost-cutting initiatives are yielding positive movement in GOM activity, including the first rig count uptick in years.
Given the limitations of US unconventional plays, operators surveyed in 2018 planned to increase GOM drilling during second-half 2019. The offshore industry is amid a two-year recovery and spending was projected to accelerate during the second-half 2019, according to Evercore ISI senior research analyst James West in the 2019 Global E&P Mid-Year Spending Outlook. Offshore rig utilisation bottomed out in early 2017, for both shallow-water and deepwater segments, with the rebound driven by rig attrition and a rebound in drilling activity.
According to World Oil’s mid-year survey results and federal officials’ outlook, GOM well counts were set to start recovering during the second half of 2019. World Oil estimated that GOM activity totalled 65 wells in the first half of 2019, with another 74 scheduled to be drilled during second-half 2019. The projected 139-well total will be 25pc higher than 2018’s 111. Despite breakeven costs reduced to a reported $40/bl, the outlook doesn’t foresee a meaningful resurgence in deepwater drilling through early 2020.