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The Gulf of Mexico has been a mainstay of the United States oil industry since the early 1950s. The earliest production from these offshore waters occurred in November of 1947. The production from the Gulf of Mexico has trended upward from those early days, reaching a peak in 1971, declining through the late 1970s until 1980 and then rising again to reach a peak in 1984 only to fall again as the price of oil collapsed in the late 1980s. As the oil industry began to move into deeper waters in the early 1990s, once again, the Gulf of Mexico production began to rise. Today it is at an all time high. Figure 1 shows the production and discovery history for the Gulf of Mexico up until 1998.
The red curve in the figure above represents the reserves found during each year. The green curve represents the shallow-water production (<1000 feet) and until 1985 it was the entire Gulf of Mexico production. The light blue curve represents the oil produced each year from the deep waters (>1000 feet), and the brown curve represents the total Gulf of Mexico production. Up until 1985 the green and purple curves were the same. One can see that the production from the Gulf of Mexico is at an all time high. Citizens of the United States should be proud and content that so much oil and gas are being pumped out of the Gulf of Mexico in an environmentally friendly manner.
In looking at the curve, there is a disturbing features which is not easily apparent. The deep water fields (>1000 feet water depth) produce today about 52 per cent of the oil produced in the Gulf of Mexico. There are only 39 fields in these water depths! All the other 952 fields produce the other 48% of the Gulf's oil. This reliance on deep water Gulf of Mexico production is not necessarily a good thing. Deepwater fields will not last very long. Secondly, even though there is currently a lot of oil being found in the deep water Gulf, there are still only 2 years since 1977 in which more oil has been found than has been produced. This is the equivalent of a company making a profit in only 2 of the past 25 years!
According to the Minerals Management Service of the U.S. Government, by 1998 there have been 14.3 billion barrels of oil found in the Gulf of Mexico with nearly 11 billion already pumped out of the ground. I would estimate that the discoveries of the past 3 years have made the proven reserves in the neighborhood of 16.5 billion barrels and the total production by the end of 2000 was 12 billion barrels. The discoveries of 1999 moved us a bit ahead of the game, but the beat goes on--each year we pump half a billion barrels out of the ground in the Gulf meaning that in order to stay even, the industry must sustain a discovery rate which is higher than all but 8 of the past 50 years.
Natural Gas
The Gulf of Mexico is one of the main sources of natural gas for the United States. The story here is a bit different from oil. A look at the latest statistics shows a disturbing trend for the shelf. See the picture below:
The blue curve is the total Gulf gas production. The red is for the shelf. Up until 1985 all the production was from the shelf. Basically the gas production had plateaued in 1977. The disturbing trend is seen within the past 4 years. Starting in 1997 the shelf production began a 7 per cent per year nose-dive which continues today. In 2000, the shelf produced 20% less gas than we did in 1997. One can see that the production additions from the deep water (where gas is much less economic than oil) is having trouble over coming the steep dive.