Since the beginning of 2025, with the advent of a second Trump administration, think tanks and energy consultants alike have been busy contemplating what a return to a “drill, baby drill” philosophy will mean to the U.S. and global energy space.
Meanwhile, there has been much speculation on the national security and ultimate affordability of energy under a new regime in Washington, D.C., which is aggressively pushing more domestic energy production.
Notable for its absence in ongoing discussions is the Gulf of Mexico’s (GOM) offshore oil and natural gas prospects, even as many in the White House have rallied around the president’s insistence that the geographic name be changed to “Gulf of America.” No matter what it is called in the energy world, it represents a nearly 2-MMbpd oil resource or more, when the calculations include barrel of oil equivalent (boe) output.
For those pundits and experts who are looking at GOM, the outlook calls for modest but steady production this year and next, as well as a reasonably strong continuing interest from Wall Street. Rice University’s Ken Medlock, who heads the Baker Institute’s Center for Energy Studies, among other responsibilities at Rice, categorizes himself as a “realist relying on data,” and he told P&GJ that GOM is still “an attractive place for investment,” but for the immediate future, it is “likely to be a place of stable production [rather than] one of significant growth.”
In contrast, a colleague of Medlock’s at the Baker Institute, Francisco Monaldi, a PhD heading the institute’s Latin American Energy Program, said offshore development is booming in the Southern Hemisphere. “Offshore production in Guyana and Brazil has allowed the region to grow its total production in the last three years after stagnation or decline for many years,” Monaldi said.
“In fact, aside from Argentina’s shale, offshore offers the most prospects in the region. Offshore development and operational costs have declined and productivity-per-well has increased. Also, carbon emissions-per-barrel are much lower than the world average.”
Meanwhile, in its current outlook, Standard & Poor’s Global published an analysis from energy writer Starr Spencer, projecting record production from Gulf operators this year, and global energy consultant/analyst at Wood Mackenzie (WoodMac) Robert Clarke, in a January report, suggested five areas to keep an eye on in 2025 — including efficiency gains by operators and strategic merger/acquisition activity — while staying silent on the offshore generally and GOM in particular.
“Sentiment towards upstream investment will continue to improve, tempered by headwinds,” Clarke predicted. “Investors will pay more attention to reserves and resource lives than in the last decade, and companies will look to reload their hoppers.”
Similarly, the Deloitte “Energy, Resources and Industrials Outlook” was silent on offshore prospects but bullish on the financial attractiveness of the oil and gas sector, which it sees making gains through continued efficiency improvements.
“In 2024, the crude oil and natural gas market navigated a complex landscape of controlled OPEC+ supply and variable demand, heightened geopolitical tensions, macroeconomic weakness and a continued focus on energy transition,” according to Deloitte’s outlook:
This resilience is reflected in the stability of oil prices: Brent crude oil prices exhibited a minimal average monthly change and a monthly range-bound movement between $74–$90 a barrel in 2024, making it one of the most stable in the past 25 years. Globally, the oil and gas industry distributed nearly $213 billion in dividends and $136 billion in buybacks between January 2024 and mid-November 2024.
This assessment from Deloitte’s Center for Energy and Industrials lauded the oil and gas space for “prioritizing high-return investments and maintaining a focus on production efficiency.” As a result, Deloitte analysts think energy companies have maintained high-level results that have earned more trust among investors.
Deloitte calculated that over the last four years, the industry’s capital expenditure has increased by 53%, while its net profit has risen by nearly 16%.
“In fact, oilfield services reported its best performance for the 2023 to 2024 period in the past 34 years,” Deloitte notes in the outlook.
In January, the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook (STEO) for the federal waters off GOM delivered a mixed message of bullishness for oil production. This was not so for natural gas, which the outlook sees dipping under 1.75 Bcf/d this year and the next. STEO does project continued growth in U.S. dry gas production and in LNG exports although domestic demand will be flat to slightly less in the next two years.
Oil in the Gulf is another story, according to EIA’s outlook. For the next two years, GOM production is expected to rise to about 1.85 MMbpd from 2024 levels of just over 1.75 MMbpd. As with natural gas, the United States is projected to be a continuing net exporter of crude oil. The STEO outlook for Gulf production comes on the heels of a decline last year, following a steady uptick in 2023.
EIA’s February-released outlook put a slight increase to oil production this year compared to its perspective last September when it predicted both oil and gas would be flat. Back then, it was calling for 1.9 MMbpd in 2025, an uptick from 1.8 MMbpd last year, with gas staying at 1.8 Bcf/d for both years.
“The federal offshore portion of GOM accounts for about 97% of Outer Continental Shelf (OCS) production with the rest falling within state maritime boundaries,” EIA noted late last year. “The crude oil and natural gas forecast volumes for federal offshore GOM are in the western/central planning areas as defined by the Bureau of Ocean Energy Management (BOEM).”
For the past 30 years, the deepwater plays have accounted for most of GOM added production, EIA said.
Industry projections for GOM remain bullish. The Washington, D.C.-based American Petroleum Institute (API) January report, “The Economic Impacts of a Consistent Offshore Oil and Natural Gas Legislated Lease Program” is one example.
API spokesperson Scott Lauermann told P&GJ the study by Energy & Industrial Advisory Partners (EIAP) “highlights the economic potential of a legislatively directed offshore program that has a big focus on the Gulf of Mexico.” The right leasing program could “significantly boost” both energy production and economic growth, according to EIAP’s report. Rice’s Medlock, for one, predicts that offshore leasing will pick up.
The API study takes a long view of GOM, projecting great growth over the next 15 years, noting production in 2040 would be 510,000 bpd more with a reinvigorated federal leasing program, which is expected in the second Trump administration.
EIAP’s report projects billions of added dollars and thousands of added jobs by 2040, following its leasing scenario. These added dollars include $4.8 billion in added industry annual spending in GOM, $4.6 billion in added U.S. gross national product (GDP) growth and added federal government revenues from the Gulf, totaling $1.7 billion annually in 2040.
For both GOM and offshore Alaska, API’s report calls “predictable and frequent leasing of the OCS areas as crucial for ongoing development of these resources.” The report scenario envisions two offshore oil and gas lease sales in GOM annually, as well as a semi-annual lease sale in Cook Inlet, off of Alaska. By 2034, the projections call for an average increase in annual offshore spending by the industry, topping $1.3 billion annually, with 16,000 jobs added.
“We recently implemented a new model for forecasting crude oil and natural gas production from the U.S. federal offshore GOM in the STEO,” EIA officials noted with the latest outlook. On this new model, they added:
Our new approach combines analysis of well-level historical production data with upcoming field developments to provide a more detailed outlook for the region. Modeling at the well level improved representation of production dynamics…the changes were implemented in August 2024.
Operationally, three new GOM subsea tiebacks began producing last year, including the Rydberg field, which started producing in February 2024 as a tieback to the Appomattox platform. Later, the Winterfell field began production in July, and Pickerel started producing at the same time as a tieback to Tubular Bells. EIA staff indicated they expect the tiebacks combined will contribute an average of 11,000 bpd in 2024 and 42,000 bpd in 2025, after ramp-up.
A new floating production unit (FPU) in the Anchor field — a deepwater high-pressure field, located at a water depth of 5,000 feet with reservoir depths around 32,000 feet — began production in August. The Anchor FPU has a nameplate capacity to produce 75,000 bpd of crude oil and 28 MMcf/d of natural gas, according to EIA’s calculations.
Federal authorities have noted technological advancements in high-pressure and high-temperature drilling and production equipment, and the subsequent federal Bureau of Safety and Environmental Engineering (BSEE) regulatory approval has enabled the production of deepwater resources since 2019, aiding the development of deepwater projects in the Lower Tertiary/Paleogene and Upper Jurassic Norphlet formations.
Rice’s Medlock echoes this part of the equation, reiterating that technical advances continue to reduce development and production costs. “Advances that allow for improvements in operational efficiencies are tremendously important, and increasing automation and the use of artificial intelligence (A.I.) in the field can bring new efficiencies into the [offshore] space,” he said.
“This can reduce costs, increase safety and streamline operations more, and this is saying a lot, since the offshore industry is already one of the largest consumers of frontier technologies on the planet.”
GOM’s largest field, the Whale, was aided in getting started last year by these latest advancements, with production from a new FPU. Whale was expected to produce around 85,000 bpd, after ramp-up, in 8,600-ft depths. Additional subsea tiebacks and facilities are expected to come online this year, with a combined production potential of more than 56,000 bpd in 2025, according to EIA.
The natural gas produced in GOM is predominantly associated gas, so the federal agency’s GOM gas production forecast is largely based on a ratio to crude oil production.
“For each well, the ratio of natural gas to crude oil produced (also known as the gas-oil ratio) remains relatively constant,” EIA analysts note.
Analysts take six months’ gas-oil ratio for each well and apply this average to the well’s crude oil forecast to determine natural gas production. We expect the new fields of 2024 and 2025 will contribute about 15 MMcf/d in 2024 and 173 MMcf/d in 2025. The gas-oil ratio for total GOM production is expected to average about 1 MMcf of gas per thousand barrels of crude oil in 2024 and 2025.
Globally, offshore prospects are more robust than GOM, most of the current analysts agree. Medlock notes that offshore involves a much longer time horizon for lead times and development.
“The interest is high largely because offshore is deemed the frontier that must be developed to meet future energy demand,” which Medlock sees has been surging for the past 40 years at a rate of 1 million bpd.
“The world is coming to realization that oil demand is not likely to precipitously decline anytime soon,” Medlock said. As a result, the market needs steady new production.
“Any demand growth over the next two decades will certainly need new supplies from offshore prospects,” he said.
Medlock sees global prospects for offshore investment as “robust,” but notes that in the United States investment will be driven by market prices, development costs and the extent to which public policy allows for access to the resources.”
From an environmental standpoint, regulatory reviews will “remain the norm,” according to Medlock, who thinks legal challenges will always be part of the equation and that the long lead times for offshore projects transcend four-year political administrations. He thinks offshore operators will continue to adhere to industry best practices, because it is in their long-term interests to do so.
In a report released in late February, WoodMac outlined a bullish case for natural gas globally. It concludes that “while the world is increasingly turning to renewable energy, natural gas remains fundamental to meeting global energy needs and reducing emissions in the medium term,” according to the authors of “The bridge: Natural gas’s crucial role as a transitional energy source.”
“Gas demand has surged by 80% over the past 25 years, now meeting almost a quarter of the world’s energy needs,” said Massimo Di Odoardo, vice president of gas and LNG research at WoodMac. “Its success lies in the scale of global resources, low production costs, ease of storage and dispatch and comparative environmental advantages.”
Regardless of what it might be called, the Gulf of Mexico likely will be the subject of discussion and speculation for its energy resources well into the 21st Century, and increasingly, it will have plenty of competition globally.
Other astute observers believe it is “highly likely that there will be economically viable offshore resources at the end of this century,” given today’s resource assessments and the continuing technological advances throughout the oil and gas industry’s value chain.
“Depletable resources stop being used not because we physically run out of them, but because they get too expensive to extract relative to alternatives; at some point this will be true for offshore plays, but that is not going to happen in the near future,” Medlock added.
The other Rice University scholar, Professor Monaldi, touts Latin American offshore production, citing Guyana, Suriname and Brazil as places where “significant reserves” are likely to develop in the next decade.
“Guyana’s growth has been faster than expected and is predicted to reach 940,000 bpd by the end of 2025,” he said.
Even though production in Brazil was flat last year, Monaldi expects this to turn around this year, and he cited encouraging projections for Australian-based Woodside Energy’s offshore project in Mexico.
Ever the realist, Monaldi also cautioned that his bullish outlook for Latin America could be tarnished by several factors, including a prolonged oil price decline below $50/bbl, acceleration of the envisioned energy transition, unrealized reserve projections and environmental concerns stopping Brazil’s equatorial exploration.
Most of these same caveats apply to GOM and its energy future. There are no assurances, but plenty of positive indicators at the start of this year.
