An empirical evaluation of economic limits in the shallow water Gulf of Mexico, 1990–2017

Abstract

Net revenue during the last year of an offshore structure's life serves as a proxy for the economic limit of production and encapsulate all the relevant cost information available. By reviewing a large group of structures, economic limits can be quantified and compared using structure attributes to obtain insight into operating cost thresholds and business practices. The purpose of this paper is to evaluate the gross revenue statistics the last year of production for oil and gas structures in the shallow water Gulf of Mexico. Summary statistics are tabulated by primary production, structure type, manned status and water depth for 3054 decommissioned structures in water depth less than 400 ft from 1990 to 2017. The P50 adjusted gross revenue the last year of production was $1.2 million for gas structures and $627,000 for oil structures. For gas structures, P20 and P80 economic limits are $282,000 and $3.97 million; for oil structures, $135,000 and $2.01 million. Factor models are constructed to distinguish the impact of individual variables and show that majors have an average $820,000 greater economic limit per structure than independents.