Can the US Gulf of Mexico keep producing at low prices?

Production shut-ins and short-run marginal costs (SRMC) are the oil industry’s topics of the month. As companies grapple with oversupply and sub-US$35/bbl Brent prices, we've assessed how the US Gulf of Mexico’s (GoM) deepwater asset base stacks up in this lower price environment. Nearly 1.5 mmbd, or 82% of the total regional output, has a SRMC below US$10/bbl Brent-equivalent. Only the most mature fields will be forced to consider shut ins for economic reasons. While GoM, as a whole, is largely resilient, some companies are in more advantaged positions than others. If the price environment worsens, the region can be flexible. Experience with hurricane risks means operators are accustomed to short term shut-ins and bringing wells back online quickly and safely. But operating amidst coronavirus presents some unique challenges as well.