The Trump Administration is looking at the possibility of extending the limits for the length of tiebacks in the Gulf of Mexico to allow operators to connect more wells to existing oil and gas platforms, the director of the Bureau of Safety and Environmental Enforcement (BSEE), Scott Angelle, told Reuters.

The BSEE is currently is reviewing the policy that limits the length of the tiebacks to within 25 – 30 miles from existing offshore platforms, Angelle said.

The bureau is examining if there could be “a policy change that can make subsea tiebacks and investment into the Gulf of Mexico bigger, broader and bolder for the next decade,” BSEE’s director told Reuters.

The bureau also reviews if platforms in the Gulf of Mexico are being used to their full potential, the official said, noting that “The last thing we want to do is have an asset of the American people that is stranded and left behind.”

The U.S. Gulf of Mexico saw its crude oil production hit a record high last year, at an annual average of 1.897 million barrels per day (bpd), EIA data shows. The monthly production record was 2.045 million bpd in August 2019. After the price crash in March and April this year, crude oil production from the U.S. Gulf of Mexico slumped to 1.613        million bpd in May 2020, according to the latest available EIA data.

The U.S. Gulf of Mexico is better prepared now to ride out the oil crisis than it was in the 2015-2016 downturn, as 82 percent of oil production has a short-run marginal cost – operating costs, taxes, and royalties – of US$10 a barrel Brent, Wood Mackenzie said in June this year.

The Gulf of Mexico is now nimbler and leaner and more resilient, the consultancy said in research.

Despite the lower costs and leaner operations compared to the previous crisis, the Gulf of Mexico will not remain unscathed by this year’s price collapse as companies have cut budgets and recalibrated exploration and sanctioning plans. According to WoodMac, capital expenditure (capex) by Gulf of Mexico operators is expected to drop to US$7.4 billion this year, down by 22 percent or US$4 billion from 2019.

By Charles Kennedy for Oilprice.com

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