Technically, I'd need to know a little more about who is producing what to be more certain. But with the information you've given, it certainly strongly appears that the correct interpretation is a combination of your 1 and 2:
A. "…with output from deep waters off the Gulf of Mexico and (output from deep waters off the coast of) Canada continuing to build as new projects come online."
The way the sentence is set up, the comma after 'enough,' followed by 'especially,' means the subsequent clause will relate to and modify 'the drop in production.' Using 'and' in the modifying clause almost certainly indicates that the description of the situation regarding Canada is identical to that of the Gulf of Mexico. Were the Canadian production output from, say, dry land, the structure would not have been parallel and thus 'and' would not have been used. That sentence would have had to have been constructed as
B. "…with output from Canada and from deep waters off the Gulf of Mexico continuing to build as new projects come online." (commas could set off 'and from deep waters off the Gulf of Mexico if desired)
or
C. "…with output from deep waters off the Gulf of Mexico and from Canada continuing to build as new projects come online."
Since the sentence is not constructed as B or C, it is logical to conclude that both the Canadian and Gulf of Mexico scenarios are identical, and thus the interpretation I enclosed in A would be correct.
EDIT: As @Graffito pointed it, it's possible that the sentence implies that Canada is building new installations, but were that the case, an accurate construction would insert a different preposition into the latter half of the sentence, like so:
D. "…with output from deep waters off the Gulf of Mexico, and from Canada continuing to build as new projects come online."
Without the "from," we are left to believe that "with" applies to both the Gulf of Mexico and to Canada, and thus it is the output of both areas that is continuing to build.
