Tapping reserves in the Gulf of Mexico is getting harder

The Gulf of Mexico will remain essential to the fragile US market balance for natural gas, but tapping reserves is getting harder and more environmentally risky, witnesses on a Congressional panel have declared. Recent major gas discoveries in the US portion of the Gulf have been in very deep waters beyond the outer continental shelf, or OCS, where engineering complexities make development difficult, said Matthew Simmons, president of Houston-based energy investment bank Simmons & Co.
"Deepwater gas has grown from almost nothing at the start of the 1990s to over 2 bn cfpd and is projected to grow to as high as 5 bn cfpd by 2005," he said. But these deepwater reserves pose new technical obstacles, such as the need to separate gas from oil and then transport the gas from water depths of up to 10,000 feet, he told the House subcommittee on energy and mineral resources
Deepwater gas production currently accounts for only 15 % of total US Gulf gas output of 13 bn cfpd, representing about 25 % oftotal domestic gas supply. Most of the Gulf gas production is from the shallower waters on the OCS, and those fields are depleting rapidly as offshore rigs work flat-out, he said.
Simmons and James Hackett, CEO of Gulf producer Ocean Energy Inc. (OEI), told the subcommittee the federal government needs to let companies drill in the largely unexplored eastern Gulf of Mexico. Areas of the eastern Gulf within 100 miles of Florida's coast are off-limits to new leasing. Florida Gov. Jeb Bush also opposes Interior Department plans to take bids later this December on 5.9 mm acres of eastern Gulf leases that are farther than 100 miles from the coast.
Hackett said the eastern Gulf lease sale, known as Sale 181, could add 400 bn cf annually to domestic supply. Environmental groups testifying before the panel countered that Sale 181 isn't needed to meet US energy demands.
"Such drilling is unnecessary, because 70 % of the nation's undiscovered, economically recoverable OCS oil and gas and 80 % of the nation's undiscovered, economically recoverable OCS gas is located in the central and western Gulf of Mexico," said Lisa Speer, senior policy analyst at the Natural Resources Defense Council. Speer warned that environmental damage from offshore drilling, including the destruction of coastal wetlands, water pollution, oil spills and a diminished coastal image were all possible if plans went ahead.