HEADLINE: “Offshore industry keeps oil production growing”, By G. Allen Brooks
“One would think that offshore industry would be cratering with oil prices for a barrel having fallen from the $70s into the $60s. Various rig data trackers, however, show little change in offshore…”
JULY 11, 2025
Offshore industry keeps oil production growing
G. Allen Brooks
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One would think that the offshore industry would be cratering with oil prices for a barrel having fallen from the $70s into the $60s. Various rig data trackers, however, show little change in offshore drilling activity over the past year.
The percentage of active rigs in the U.S. Gulf has increased slightly this year, mainly due to the retirement of older rigs, which is the normal fleet winnowing process. This sustained activity reflects the long-term nature of the offshore industry. Producers believe oil prices as not likely to crash and will provide profit opportunities at current levels.
The good news for the U.S. is that total Gulf oil production is expected to increase in 2025 and 2026 from 2024. The slight projected increase, 230,000 barrels per day or a 1.7% increase, lifts total Gulf output to 13% of the national supply.
On the other hand, the Energy Information Administration projects a slight decline in Gulf natural gas output this year and next, though offshore natural gas output supplies only 1% of U.S. marketed production.
Have lower oil prices offset the president’s “drill, baby, drill” mantra? Many think the phrase calls for more working rigs and a supply surge. However, that view clashes with Trump’s push for lower oil prices to ease consumer inflation, lead to lower interest rates, and boost economic activity. Drill, baby, drill means unshackling the petroleum industry from red tape and permitting hurdles, preventing shut-in or under-exploited resources from reaching the market.
The reversal of the Empire Wind stop-work order showcases the real meaning of drill, baby, drill. No sooner did Interior Secretary Doug Burgum reverse the order than Williams Companies announced its permitting process for two pipelines to deliver natural gas into New York. The impetus for building the Constitution and Northeast Supply Enhancement Project to bring more gas into New York and potentially New England was a reported decision by Gov. Kathy Hochul to grant permits that were previously withheld. High electricity prices have sparked her concession.
A more expansive energy market will increase demand and oil and gas prices, but it will take time. Higher gas prices will come from increased electricity consumption from data centers, increased use of artificial intelligence, and a doubling of liquefied natural gas exports over the next few years.
Prices are rising despite the perception of an adequately supplied global oil market. West Texas Intermediate prices have reached their highest level since April.
Commodity headwinds are shifting to tailwinds for the oil and gas industry. The offshore support industry should be cheering.
G. Allen Brooks
G. Allen Brooks is an energy analyst. In his over 50-year career in energy and investment, he has served as an energy security analyst, oil service company manager, and a member of the board of directors for several oilfield service companies. He is a Senior Fellow of the National Center for Energy Analytics.
BOTTOMLINE: “Commodity headwinds are shifting to tailwinds for the oil and gas industry. The offshore support industry should be cheering.”