Thursday, July 15, 2010

Angola offshore oil may make up for production losses in the Gulf of mexico

Angola is set for a major expansion of oil and gas projects in the short to medium term. Production may peak in the range of 2.5-3.0 million bbl/day by 2015. Current production is about 2 million bbl/day. Angola has been a member of OPEC since 2007 and is subject to quota restrictions. Quota could easily rise if the demand for crude oil exceeded supply. Eight large production developments currently in progress on blocks 14, 15,17, 18, 31 and 32 could together add 1.2 million bbl/day by 2012.

John Wagoner, Technology Editor at Offshore Magazine reported on these production projects recently. To be sure, the international oil majors are not going to wait for a resolution of the Gulf of Mexico moratorium uncertainties to continue adding new production to existing supplies. However, for the U.S. as a nation, it is a step back from the desire to become energy independent. Hopes were high that continued and steady development of the deep oil reservoirs of the Lower Tertiary in the Gulf of Mexico (GOM) would at least arrest the current decline. No one seriously thinks that the GOM has the potential to increase overall production rates. The life of an average oil field in the GOM is in the 12-15 year range and many are depleted in fewer than 10 years. In Angola, oil companies are steadily exploring all of the blocks where good prospects exist. So far, the discovery record has been excellent. Oil quality is good and both capital and operating costs offshore Angola are less than in the GOM. Whether or not sufficient production can be obtained there to keep the pressure off of crude oil prices during the next few years is an unanswerable question. Still, knowing that good prospects exist will provide opportunities for the majors. With demand rising in Asia, that is where much of the Angolan crude will go.

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