U.S. Interior Department’s Policy Change Expected to Increase Gulf Oil Output

The U.S. Interior Department on April 24 announced a policy enhancement that will increase offshore oil production in the Gulf of America. As part of the executive order issued by President Trump on Jan. 20 titled, “Unleashing American Energy,” the Bureau of Safety and Environmental Enforcement (BSEE) employed new parameters for Downhole Commingling in the Paleogene reservoirs, increasing the allowable pressure differential from 200 psi to 1500 psi.

The policy change is informed by extensive consultation with key leaders in the offshore industry and could lead to a 10 percent increase in oil production, which equates to more than 100,000 barrels per day output rise over the next decade. Further production increases could become accessible as operators provide additional data. A study conducted by the University of Texas on commingling reports that commingled production maximizes per-well oil production in comparison to sequential schemes – providing 61 percent more oil recovery over 30 years and 21 percent more over 50 years.

The change is in line with modern reservoir performance analysis and brings up-to-date guidelines based on a 2010 government study. The updated rules allow operators to safely extract from multiple reservoirs with larger pressure differences, as long as they comply with new requirements, including fluid compatibility certification, pressure monitoring, and regular performance reporting to BSEE.

The Gulf of America continues to be the U.S.’s primary offshore source of gas and oil, accounting for around 97 percent of all U.S. Outer Continental Shelf oil and gas production. Outer Continental Shelf activities produce significant revenues from lease sales, rental fees and royalties on production.

Following President Trump’s executive orders, the department has taken on actions to reduce burdensome regulations in the energy sector. Regular and predictable offshore lease sales would allow the U.S. to maintain robust energy production. Moreover, offshore energy development is expected to be a critical component of U.S. national security and U.S. economic prosperity.