Gulf of Mexico Oil and Gas Upstream Market - Growth, Trends, and Forecasts (2020-2025)

The Gulf of Mexico oil and gas upstream market is expected to grow at a CAGR of over 2% during the forecast period of 2020-2025. Factors such as the reduction in the cost of the drilling rigs has attracted investments in offshore activities and is likely to drive the Gulf of Mexico oil and gas upstream market. However, accident such as Deep Water Horizon has imposed more strict regulations on the companies in the region which is expected to restain the Gulf of Mexico oil and gas upstream market.

• The Deep-water and Ultra Deep-water due to more oil production held a significant market share in 2018, and it is likely to dominate the market during the forecast period.
• In 2019, Cuba Petróleo Union of Cuba did its first license bidding round for exploration and production in the Gulf of Mexico, these activities may open several doors for the Cuban upstream market and is likely to create several opportunities in the Gulf of Mexico oil and gas upstream market.
• The increase in the number of offshore activities due to less investment return period is likely to drive the Gulf of Mexico oil and gas upstream market.

Key Market Trends

Deep-Water and Ultra Deep-Water Segment to Dominate the Market

• Deep-Water and Ultra Deep-Water activities in the Gulf of Mexico has driven the United States's and Mexico's upstream sector in the offshore and is likely to drive the market during the forecast period. A huge amount of the oil and gas of the United States and Mexico come from offshore activities, so deep-water and ultra deep-water is expected to dominate the Gulf of Mexico oil and gas upstream market.
• According to Energy Information Administration (EIA), in 2019, out of total oil production from the Gulf of Mexico, shallow water activities contribute 11% while deep-water and ultra deep-water contribute 89% of the oil production.
• In 2019, Chevron Corporation and Total S.A completed the exploration phase in the Ballymore oil field in the Gulf of Mexico, later in the same year, appraisal phase was conducted. The two oil majors are expecting to start development phase by the end of 2020 or in the first quarter of 2021, which includes drilling several wells. This is likely to adds up to the dominance of deep-water and ultra deep-water segment in the Gulf of Mexico oil and gas upstream market.
• In 2018, Royal Dutch Shell started production from its deep-water field, Kaikias, in the Gulf of Mexico. In phase 1, it drilled three wells that were completed in 2018, and phase 2 is expected to start in the coming years. It is one of the many deep-water projects due to which the deep-water and ultra deep-water segment is likely to dominate the Gulf of Mexico oil and gas upstream market during the forecast period.
• In February 2020, Eni S.p.A an Italian company exploring in offshore Mexico announced its new discovery at Saasken block in Sureste Basin in the Gulf of Mexico. From preliminary exploration, the block contains 200 to 300 million barrels of oil and can produce up to 10000 barrels per day.The further exploration and development of the block are likely to have a positive impact on the Gulf of Mexico oil and gas upstream market.
• Therefore, owing to the above points, deep-water and ultra deep-water exploration and production activities are expected to dominate the Gulf of Mexico oil and gas upstream market during the forecast period.

United States to Dominate the Market

• The United States offshore activities directly influences the Gulf of Mexico oil and gas upstream market. After oil prices fall in 2014 United States shifted towards onshore projects. Still, it turned out that return period of onshore projects are 10 to 15 years, and the United States started deep-water explorations in the Gulf of Mexico which are more profitable having an investment return period of 5 to 6 years. In 2018, 16% of the total oil-gas production in United States was from the offshore, majorly from the Gulf of Mexico. This shows the dominance of United States in the Gulf of Mexico oil and gas upstream market.
• An increase in the offshore rig count of United States, in 2019, clearly indicates the increase in offshore oil and gas activities in the Gulf of Mexico.
• In 2018, Royal Dutch Shell announced the final investment decision on the Vito Project in the Gulf of Mexico. It is expected to reach the production of 100,000 barrel of oil equivalent (boe) per day and is expected to be completed by 2021. This project and its further development in the future are likely to add up to the dominance of the United States in the Gulf of Mexico oil and gas upstream market.
• In December 2019, Chevron Corporation announced to develop the Anchor Project in the Gulf of Mexico, which will be the first deep-water and high-pressure project of the oil and gas industry. This project will be needing advance drilling technologies which is likely to open several new doors for United States in the Gulf of Mexico oil and gas upstream market.
• In December 2019, Total S.A announced to start front end engineering design (FEED) for its North Platte oil field, which is in offshore Louisiana. This project, in the forecast period is expected to adds up to the dominance of United States in the Gulf of Mexico oil and gas upstream market.
• Hence, owing to the above points, United States is expected to dominate the Gulf of Mexico oil and gas upstream market during the forecast period.

Competitive Landscape

The Gulf of Mexico oil and gas upstream market is moderately consolidated. Some of the key players in this market include Exxon Mobil Corporation, Royal Dutch Shell Plc, Total S.A, Chevron Corporation, and Eni SpA.

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