The Department of Interior Announces Policy Change to Boost Offshore Oil Production

The Department of Interior has implemented a policy change that could significantly boost offshore oil production in the U.S. Gulf, through expanded Downhole Commingling parameters.

The policy change from the Bureau of Safety and Environmental Enforcement (BSEE) increases the allowable pressure differential for Downhole Commingling in Paleogene (Wilcox) reservoirs from 200 psi to 1500 psi.

Downhole Commingling allows operators to produce from multiple oil reservoirs with different pressure levels through a single wellbore, enhancing efficiency while reducing the need for additional wells.

Industry analysis projects this modification could increase production output by approximately 10%, potentially adding over 100,000 barrels per day over the next decade. A University of Texas study shared by the BSEE showed that commingled production delivers 61% more oil recovery over 30 years compared to sequential production schemes.

The policy revision modernizes guidance from 2010, implementing new safety measures including fluid compatibility certification, pressure monitoring, and regular performance reporting requirements to BSEE.

The 2020 guidance, developed in the aftermath of the Deepwater Horizon disaster, limited allowable pressure differentials between commingled reservoirs to 200 psi, due to concerns about well control, reservoir integrity, and the ability to monitor fluid movement between zones.

“This is a major win for domestic energy,” said Kenneth C. Stevens, Principal Deputy Director of BSEE. “Thanks to the tireless work of our technical experts and our industry partners, this advancement enables increased recovery from existing wells, reducing the cost per barrel and strengthening our nation’s energy independence.”

The Wilcox formation, central to this policy change, represents one of the most significant deepwater exploration plays in U.S. waters. Notable discoveries including Jack, St. Malo, Cascade, and Tiber. These high-pressure, high-temperature reservoirs feature thick, stacked sandstones ideal for substantial hydrocarbon volumes.

The U.S. Geological Survey and Bureau of Ocean Energy Management estimate the Wilcox trend contains tens of billions of barrels of oil equivalent in undiscovered technically recoverable resources.

The initiative aims to enhance resource conservation while maximizing production from existing infrastructure, potentially supporting long-term price stability and energy affordability for American consumers.

The development reflects broader efforts to optimize energy production in the Gulf of America, or Gulf of Mexico as it is known internationally, through technological advancement and regulatory modernization, marking a significant shift in offshore production methodology.