There’s no disputing that shale oil has revolutionised US oil production. It started when producers sought to take advantage of oil prices over $100 by exploiting tight oil formations that would otherwise be uneconomical.
When oil prices started to fall in 2014, few would have expected the shale oil sector to become so efficient that it could profit even at modest oil prices. Even large players like ExxonMobil, the corporation behind Mobil lubricants, saw the advantages and made considerable investments in US shale plays.
The US oil industry is not just about shale oil, though. While the massive inland oil fields of the peak days of the 1970s may be a thing of the past, there has been quiet increase in offshore US oil production in recent years. Only 10 or so years ago, before the US shale revolution dominated the news, the US Energy Information Administration expected all new US production to come from offshore fields.
What is perhaps most impressive, however, is how US offshore oil production in the federal waters of the Gulf of Mexico has continued to steadily rise, even in the face of the oil price crash that began in 2014.
While offshore oil production is clearly more challenging than exploiting onshore fields, offshore fields tend to be larger. Combined with higher oil prices, there is a strong incentive to overcome the technological challenges that come with offshore oil production. Some think that such a price rise may be coming in the early 2020s, a consequence of underinvestment from cancelled projects following the oil price crash.
Despite strong rises in renewable energy, many say that these offshore resources around the world will be needed to overcome the growing demand for crude oil. After all, the world’s population is increasing by almost a quarter of a million people every day, and growing economies around the world create a stronger demand for oil.
The faith in US offshore oil production is evidenced by ExxonMobil’s $20bn Growing the Gulf project. According to the company’s corporate website:
“Technological advances have unlocked vast new supplies of energy, particularly natural gas, which has helped lead a resurgence in American manufacturing. This abundance of energy has significantly reduced energy costs and is also helping contribute to the overall reduction in US greenhouse gas emissions.”
With its investment, ExxonMobil is seeking to build new manufacturing facilities and expand existing ones in the Gulf of Mexico region of the US. This will involve 11 prominent lubricant, refining, chemical, and liquefied natural gas projects along the Louisiana and Texas coast. For example, at its Baytown complex, it is seeking to increase the production of advanced synthetic Group II and Group II+ EH base stocks. These products enable lubricant blenders, like the company’s own Mobil brand, to have more flexibility in their formulations, better product integrity, and simpler global qualification testing. The company expects to create some 45,000 jobs through the various projects. Over 12,000 of these will be full-time positions, many of which will be highly skilled, well-paying jobs.
