Oil prices have declined precipitously over the past year. Year-to-date, the cost per barrel of WTI oil has declined from roughly $80/bbl to roughly $59/bbl, a decrease of $21/bbl, or 26%. Despite this, however, the general trend among major oil producers is that capital expenditures have remained relatively strong. There continues to be a need to replace depleting oil reserves across all major oil basins globally, and this is certainly the case in the Gulf of America (GOA).

The most recent and compelling example to support this claim was BP’s announcement at the end of September that it had reached a final investment decision (FID) for the Tiber-Guadalupe floating production facility. This project, along with the Kaskida platform, is the second such approval in the Paleogene geological area, which is about 250 miles southwest of New Orleans. These projects will produce from reservoirs using technology that can safely manage pressures up to 20,000 pounds per square inch, more colloquially called 20K. In combination with its already operating platforms in the GOA, BP aims to drive production capacity to 400,000 barrels of oil equivalent per day by 2030.

This production will drive meaningful vessel demand due to both the distance from established support ports, like Port Fourchon, and the volumes of drilling fluids needed to control the pressure of these wells. It is very exciting for our industry to see these projects moving forward and also indicates an overall continued deepwater commitment by oil majors to the GOA.