Oil production in the Gulf of Mexico is set to decline
Despite record oil production in the U.S. Gulf of Mexico in 2025, experts predict that output will decline in the coming years due to a decrease in the number of operators and delays in new projects. To sustain industry production, new wells and continued investment are essential.
Petrus
According to industry experts, energy production in the US Gulf of Mexico may soon begin to decline due to a significant reduction in the number of companies operating in the region.
In 2025, oil production in the Gulf of Mexico reached a record high, with 714 million barrels produced over the year—the highest annual output in the region’s history. However, the number of operators and service companies in the Gulf dropped to a historic low last year.
Over the next few years, oil output on the US continental shelf is expected to decrease. New large-scale projects such as Sparta (Shell) and Kaskida (BP) could influence the situation, but their launch is scheduled only for the end of the decade: production at Kaskida is expected to begin in 2029, and at Sparta in 2028. As a result, a short-term decline in production is forecast.
The industry notes the need to increase the number of operators and drill new wells to maintain production volumes.
At the Offshore Technology Conference in 2026, updated information was presented on the innovative Shenandoah project in the Gulf of Mexico. This project became the second in the region to require certification of subsea equipment capable of operating at 20,000 psi (20K technology). Technical challenges in implementation led several companies to exit the project before the rights to the site were transferred to LLOG and Beacon.
Production at Shenandoah began in July 2025. Currently, the project produces 120,000 barrels of oil per day, with expansion efforts underway. Project partners are drilling additional wells at the Monument site, which will be connected to the production platform, and are also planning to develop the Shenandoah South subsea area.
The Shenandoah project was conceived before the necessary technologies for its realization existed. It took 22 years from obtaining the offshore license to the start of production, and the first hydrocarbon discovery at this site occurred 17 years ago.
In April, the US Department of the Interior confirmed that oil production in the Gulf of Mexico reached a historic maximum in 2025.