Deepwater output to triple within the decade

Analyst firm Douglas Westwood expects to see deepwater output triple within the decade, Managing Director John Westwood told Deep Offshore Technology conference attendees today in Marseille, France.

Analyst firm Douglas Westwood expects to see deepwater output triple within the decade, Managing Director John Westwood told Deep Offshore Technology conference attendees today in Marseille, France.

"We see a real growth coming from West Africa," he said, adding he also expects to see increases in the deepwater Gulf of Mexico. He expects peaks yet to come that are more than double the 2002 West Africa and GoM deepwater output.

And to support this projected growth, Douglas Westwood expects to see deepwater capex hit $56 billion through 2007, with the "Golden Triangle" � GoM, West Africa, and Brazil � picking up the dominant part of the spend.

Gas output will also be a focus, Westwood said. Local shortages and a drive to halt flaring will lead to higher gas output, he said.

"It is gas growth that is a really big thing for the future," he said.

To get more efficient production of gas and oil, Westwood expects to see both new technology and a revived interest in older technology, namely subsea processing.

"One thing that we think is really going to start changing the game is subsea processing," he said, noting the first unit, installed in 1970, was followed by less than two dozen units over the next three decades. Operators didn't begin expressing interest in the technology until 2003 when they began searching for a way to remove equipment from the topsides, he said. Given the focus on this technology, he projects 87 subsea processing systems to be installed in the next five years.

"The future lies with companies that can capture those technologies and carry them forward," Westwood said.

Quest Offshore President Paul Hillegeist said he expects market conditions to improve soon, given indicators like increasing economic activities and rising corporate profits.

"2003 was a stormy, difficult, and painful year for contractors," he said.

Brazil, he said, should show increasing output, with 320 subsea wells projected through 2008. The North Sea will post a decreasing, yet "respectable" showing in terms of subsea tree bookings in the same time period.

"The Asia-Pacific market holds a lot of potential," he said. "It's been a sleeping giant."

Hillegeist expects increased drilling off West Africa and declining activity in the GoM due to fluctuating market cycles.

11/20/03

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