Gulf of Mexico rebounding despite regulatory reform

Entering the fourth year of sweeping regulatory reform, the US oil and gas industry is still grappling with clarity and compliance.

PaganieDavid Paganie • Houston

Entering the fourth year of sweeping regulatory reform, the US oil and gas industry is still grappling with clarity and compliance. Despite the challenges (and uncertainty), E&P activity in the US Gulf of Mexico is in the early stages of an extended growth cycle, and the region is expected to remain a leading destination for oil and gas operations. This is one key finding in a recent survey by independent advisory firm GL Noble Denton on the impact of regulatory changes on the US oil and gas industry. The firm sought the opinions of more than 100 US industry professionals to assess the status of the regulatory reform.

More than half (51%) of the survey respondents suggest that the authorities could have done a better job in preparing the industry for regulatory changes, and 48% said there was a lack of clarity over where liability lies for any future incidents. Meantime, US industry professionals expect the regulatory landscape to get even tougher in the coming years. Nearly nine in 10 (85%) respondents expect tightening reform in the next two years, and 60% of those polled anticipate the trends to have global implications. Relatedly, a majority of respondents cite increased compliance costs (81%) and a greater administrative workload (76%) as the two largest impacts. Some of the burden is on operator staffing levels to keep pace with the expanding regulatory oversight. Nevertheless, about 45% of survey respondents believe that the US will remain a compelling environment in which to operate.

Developing trends

Supporting this premise are the developing trends in the GoM, which we highlight in our annual mid-year report inside this issue. We analyze the trends, challenges, and opportunities in the region, beginning with a review of drilling activity by Bruce Beaubouef, Offshore managing editor. Supported with insights from key drilling contractors, Beaubouef gives his perspective on the outlook of E&P in the Gulf, including a forecast of inbound drilling rigs for deepwater development, which soon could reach a five-year high. Beaubouef's full report begins on page 34.

One area of the GoM in particular that is drawing increasing interest is the ultra-deep Paleogene play, also known as the Lower Tertiary trend. A series of recent discoveries in the area have been reported. But, the inherent geological challenges and extreme water depths are testing the limits of field development technology, explains Russell McCulley, Offshore senior technical editor. McCulley, beginning on page 56, reviews operator initiatives to effectively exploit the Paleogene play.

Online exclusives

The entire contents of this issue and archives back to 1995 are available at What you may not know is that, in addition to the magazine content, daily news, webcasts, videos, and more, we post original feature articles that are available online only.

Last month, we launched a new series, Legal Perspectives, on the legal issues facing the offshore oil and gas industry. The first article in the monthly series is titled, "The 'Right to Know Rules' - What the oil and gas industry needs to know," by Daniel Pipitone, Chamberlain Hrdlicka. Other recent titles available online include, "Offshore Indonesia E&P activity revs up," Offshore staff; and "Ghana establishes new petroleum industry regulator," Dr. Juliette Twumasi-Anokye, Petroleum Commission, Ghana.

The goal is to continue serving the growing online community with the latest trends and technology that you have come to expect from Offshore magazine. As with many online platforms, ours is still evolving, and we would like to hear your thoughts and ideas and how we might improve it for you.

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