NEW ORLEANS – Future prospects for offshore and deepwater oil and gas development throughout the world will be bright over the next decade, but may not be without potential market risk, according to a presentation given Tuesday morning at the Deep Offshore Technology International Conference & Exhibition in New Orleans.
These insights and market forecasts were provided by Marcel Negherbon, an energy analyst with consulting firm Douglas-Westwood.
In his presentation on “Global Deepwater Prospects,” Negherbon said that over the next decade, the developing economies of the world will drive oil demand and thus offshore development projects. Production will need to rise to meet this demand, and developing countries may “bid away” supplies from OECD nations. In the near-term, he said that oil supply may be re-allocated from OECD countries to the growing markets in non-OECD countries.
Negherbon said that he did not believe that the world had reached “peak oil,” but commented that future oil supplies will be harder to find and more expensive to produce.
According to his firm’s projections, Negherbon said that world oil consumption will likely rise from 2.5% to 2.8% per annum. This demand growth will mean future opportunities for deepwater development.
Negherbon also noted that E&P companies have prepared budgets assuming an oil price of $77 per barrel on average, up from $70 per barrel last year. He also noted that oilfield service company headcounts have surged in recent years, up 67% – about 125,000 people – in the last four years. The recent recession provided a minor setback, but employment in the oilfield is expected to rise 12% this year.
In terms of the offshore market forecast, Negherbon said that tree installations are recovering from the recent recession, and the number is expected to more than double between 2010 and 2015. Tree installations are expected to return to record levels in 2012, as more delayed projects come online.
Expenditures of $231 billion are forecast for 2011-2015, with developments in the “Golden Triangle” expected to dominate deepwater spending. He projected a drilling spend of $85 billion; subsea equipment, $70 billion; floating production structures (FPS), $37 billion; and offshore pipelines, $39 billion.
FPS installations were expected to be down a bit in 2012, but there will be “strong growth anticipated in the middle of the decade.” There should be 25 to 30 FPS installations per year in the middle of the next decade, Negherbon said. FPS expenditures could reach $20 billion in 2015; and floating liquefied natural gas (FLNG) expenditures could reach $22 billion in the next decade.
FLNG units are expected to be deployed to Australia, followed by Latin America, Asia, and North America in the coming years.
The ROV market saw a modest decline in 2009, with revenues down six to seven percent, but a recovery in this market has been steadily growing since 2010.
Offshore operations and maintenance expenditures reached $53 billion in 2009, and this market is expected to grow as well.
Future potential risk factors, Negherbon said, include another widespread recession, especially in China; potential political instability in the resource-rich nations; major industry accidents; and bottlenecks in the supply chain.
Demand will not be a problem: “The demand will be there,” Negherbon observed.