(Bloomberg) – Beacon Offshore Energy LLC, an oil explorer backed by Blackstone Inc., is betting on a drilling renaissance in the U.S. Gulf of America/Gulf of Mexico as it starts up some of the most productive wells in the US using new technology to pump once-impossible-to-reach crude.
The company’s four wells, which started producing between July and October, are pumping an average of 25,000 bpd, Chief Financial Officer Marc Hensel said in an interview.
“These are the largest producing wells in all of North America, not just in the Gulf,” said Hensel, who helped form Beacon in 2016 with backing from Blackstone.
Wells in the Gulf such as Beacon’s are important to watch in the years ahead because they’ll be the engines of US production growth as output plateaus in aging shale fields. That shift toward more productive offshore wells with longer lifespans threaten to pose a challenge for the global crude market as a supply glut looms.
Beacon’s wells are part of the Shenandoah prospect, which Occidental Petroleum Corp.’s Anadarko Petroleum discovered in 2009 but ultimately left behind for quicker, easier output onshore at the start of the shale boom. Beacon became the operator in 2020 with a goal of getting costs down to ultimately produce the prospect.
“I love stranded discoveries,” Hensel said. “When someone has found the oil in the ground and you just have to get it out, that’s obviously much lower risk than starting with a lease of open ocean with no discoveries on it and you’re having to drill exploration wells.”
See also: Shenandoah field reaches 100,000 bpd milestone in deepwater U.S. Gulf
The Shenandoah discovery lies in a section of the earth’s crust that is so difficult to drill the industry had to come up with new ways to extract the crude. Oil majors including bp Plc, Chevron Corp. and Shell Plc began more than a decade ago to develop a new generation of oilfield gear to reach through more than 6 miles of water and rock. Temperatures that far down can climb to 400F (204C), and pressures in the wellbore can reach 20,000 pounds per square inch — equivalent to two elephants sitting on your chest.
Such high-pressure oil finds have only begun to get produced in the past year, marking a new frontier in the US Gulf.
“There’s definitely going to be some kind of — maybe not a boom like it probably should be — but a fairly modest boom from this technology implementation in the Gulf,” said Vishnu Gopakumar, an analyst at Enverus. “Now you’re enabling operators to go back to their existing fields and drill deeper and unlock resources that they weren’t able to before with this new technology.”
Beacon is planning to bring on roughly two wells per year for the next several years in the high-pressure environment, with all of them linking to the driller’s new floating production and storage vessel, or FPS, which will serve as a hub for nearby discoveries.
The company’s Monument discovery is slated to begin production next year, along with the second phase of Shenandoah. And production at a new discovery called Shenandoah South is expected in 2028.
Producers in the US Gulf are expected to bring on 300,000 bbls of new daily output this year and an additional 250,000 bbls in 2026 due to projects underway, according to forecaster Wood Mackenzie Ltd.
“The Gulf is still a very material part of the overall picture,” Hensel said. “Will we ever see a new high for production in the Gulf? I think there’s still potential to drive it higher.”
