The Gulf of Mexico's misty horizons

While production will rise in 2018, the longer-term prospects are less positive

Not much has changed over the past 12 months to lessen the misery in the US Gulf of Mexico (GoM), where low commodity prices pushed E&P activity to historic lows. As we predicted a year ago, the string of deep-water oil projects coming to completion raised the Gulf's share of US oil production from 17% in 2016 to 19% in 2017. Conversely, the Gulf's contribution to US natural gas output has shrunk from 5% to roughly 4.5%. Drilling activity hasn't improved, with the Baker Hughes Rotary Rig Count listing an average 20 units working in the Gulf during the first 10 months of 2017, compared with an average 22 rigs during 2016. A mixed picture can be found in the number of drilling permits appr