Society of Petroleum Engineers 6200 North Central Expressway Dallas, Texas 75206


American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc.


Projections indicate that offshore areas will provide much of the nation's future supply of petroleum. The amount of oil that is ultimately recovered from these areas will be profoundly affected by public policies currently profoundly affected by public policies currently under consideration by the federal government, such as changing oil prices, varying federal leasing policies, investing in research and development, and delaying development.

This study was conducted to examine the effects of these policies on offshore oil production. Previously available models of production. Previously available models of offshore cost models were limited severely for this purpose because they often ignore the important variables to water depth and field size and because they frequently fail to account for the full range of essential costs.

The model developed for this study sought to remedy these shortcomings by incorporating these variables and including all costs. Projections of undiscovered reserves were Projections of undiscovered reserves were distributed by water depth and field size based on the distribution of existing federal offshore fields and onshore fields. These were added to the existing reserves to comprise the full data base. The Gulf of Mexico was chosen for the initial detailed analysis reported here.

This paper presents the detailed models and methods, and displays the sensitivity of offshore production to a range of alternative public policies. public policies


As existing petroleum resources dwindle and energy demand rises, the need for new domestic energy supplies becomes more important. Onshore exploration and development, improved oil recovery, and synthetic fuels may provide substantial portions of these new supplies, but offshore oil undoubtedly will be a major contributor.

Offshore oil production already makes a substantial contribution to domestic supply — accounting for about 16 percent of current domestic oil production - and its future role is expected to grow. Though projections vary, recent estimates indicate that the offshore area may provide from 30 to 65 percent of the future domestic oil supply (Table 1).

As shown in Table 1, these estimates of the quantity of future (undiscovered) recoverable offshore oil vary dramatically — from a low of 26 billion to a high of 200 billion bbl.

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