Current Gas Glut Dampens Enthusiasm for New Gulf Find

A major new gas discovery in the Gulf of Mexico could be good news for the gas development sector in that region, but current and projected market conditions are not in developers’ favor.

While analysts had guessed that deep gas plays in the shallow water areas of the Gulf of Mexico would eventually be exploited for U.S. supply, the recent discovery by New Orleans’ McMoRan Exploration Co. at its Davy Jones prospect is said to be one of the largest in decades.

Gas production from the Gulf of Mexico is about 7 bcf/day, only about half what it was a decade ago.  Analysts estimated the Davy Jones discovery could contain some 2 trillion cubic feet of natural gas, reported the Houston Chronicle.

While increased supply could be good news for consumers and businesses, producers have been struggling with the low prices fetched by the unconventional gas that has flooded the market in the last couple of years.

LNG imports, which are expected to increase as worldwide supply trains come online, contribute further to domestic oversupply.

Estimates of the potential of the new discovery are preliminary at this point, and development would likely be three or more years down the road. 

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