LAFAYETTE, La. (KLFY)- The Bureau of Safety and Environmental Enforcement released a joint research study that plans to make drilling in the Gulf of Mexico more profitable.
Drilling in the shallow water province has remained a major concern for the oil and gas industry over the last 20 years.
In order to recover from the decline, experts say they must change their approach by making the Gulf of Mexico more open for business.
The BSEE and the Bureau of Ocean Energy Management released a report indicating the Gulf will now be treated as two separate provinces.
“There’s a shallow water province and a deep water province,” BSEE Director Scott Angelle said. “The deep water provinces doing very good. Last year, we’ve had the highest production we’ve ever had as far as oil production.”
The updated discounted rate for the shallow water province will apply to special case royalty relief applications and will only be applicable for new wells and production in the region.
Angelle explains how they plan to bring those same results to the shallow water province where $20 billion in oil and natural gas resources could be stranded if the current trends continue.
“We would see a significant decrease in natural gas production, a significant decrease in oil production and a significant decrease in the number of wells drilled,” Angelle said.
Research has laid the groundwork for two actions that encourage increased activity. It includes updated discount rates that will be used for special case royalty relief evaluations and the authority to consider applications on a per project basis.
“It’s a more specific tailored approach to managing it. We hope it unlocks investment, allows capitol to be employed, jobs to be created and production to be made available to America,” the BSEE director said.
Angelle says it gives companies the opportunity to have a higher return on their investment which is necessary for what he calls the rabbit-size reservoir.
“We have an opportunity to manage the shallow water a little different, unlock us some capital, put people to work and create a better, older America,” he added.
Angelle says the timeline of this production will begin in January, 2020.