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Consultant Rystad forecasting an offshore oil and gas bonanza

Shell's Appomattox platform in the Gulf of Mexico. Norwegian consultant group Rystad Energy expects offshore will see hundreds of billions of new investments coming in a few short years. Photo courtesy of Photographic Services, Shell International Limited
1 of 2 | Shell's Appomattox platform in the Gulf of Mexico. Norwegian consultant group Rystad Energy expects offshore will see hundreds of billions of new investments coming in a few short years. Photo courtesy of Photographic Services, Shell International Limited

March 7 (UPI) -- Offshore oil and gas production has a lower carbon footprint than other extraction methods and the sector is primed for hundreds of billions of dollars in new investments, Norwegian energy consultant Rystad Energy said Tuesday.

Rystad estimates the offshore oil and gas sector is gearing up for its best decade in years, with $214 billion in new investments expected. If the forecast proves accurate, Rystad expects investments will top $100 billion as early as this year for the first time since the start of the previous decade.

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"Offshore oil and gas production isn't going anywhere, and the sector matters now possibly more than ever," Audun Martinsen, the head of supply-chain research at Rystad, said.

Oil and gas companies have embraced capital discipline and shareholder returns over spending on new production. But with the global economy still adjusting to the loss of Russian oil and gas due to sanctions imposed in response to its 2022 invasion of Ukraine, demand for new products is accelerating.

Rystad estimates that offshore accounts for about 68% of total production through next year, up from around 40% between 2015 and 2018. In terms of new developments, the consultant group said offshore accounts for about half of the projects already sanctioned over the next two years, nearly double the rate from the period ending in 2018.

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Shell and Norwegian energy company Equinor in February started production at the Vito floating production facility in the U.S. waters of the Gulf of Mexico. Shell estimated peak production would be around 100,000 barrels of oil equivalent per day.

Equinor added that the platform itself was reconfigured so that costs would be 70% lower than initially expected and emissions of the potent greenhouse gas carbon dioxide would be 80% lower over its expected lifetime.

"As one of the lower carbon-intensive methods of extracting hydrocarbons, offshore operators and service companies should expect a windfall in the coming years as global superpowers try to reduce their carbon footprint while advancing the energy transition," Rystad's Martinsen added.

More than 73 million acres of U.S. territorial waters of the Gulf of Mexico will open for drilling auctions in March, in line with federal mandates.

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