Federal Offshore, Gulf of Mexico OCS
A modification of the methodology was applied to areas (such as the Gulf of Mexico and the Rocky Mountain States) that had exceptional growth in well completions and therefore, wellhead capacity.
- In these areas, growth in effective productive capacity will be limited in the short term by the infrastructure rather than the wellhead productive capacity.
- The infrastructure capacity in these areas is expected to grow at a slower rate than the wellhead capacity in the short term.
- Therefore, modeling effective productive capacity as a percentage of wellhead productive capacity is not appropriate when wellhead productive capacity growth rapidly exceeds historical infrastructure capacity.
- In these areas, infrastructure capacity was modeled to grow at approximately 1/3 the wellhead productive capacity growth rate based loosely on history. If infrastructure capacity growth was set at 1/2 the wellhead capacity rate, then effective productive capacity would grow faster reducing the effective capacity utilization by roughly 4 percent in the Gulf of Mexico and by 3 percent in the Rocky Mountain States, which decreases the Lower-48 States effective capacity utilization by 2 percent to roughly 91 percent in December 2001. A slight reduction in the potential for price volatility would result from the lower effective capacity utilization that results from switching the infrastructure growth rate from 1/3 to 1/2 of the wellhead productive capacity growth rate.