Douglas-Westwood released its newest study,The World Offshore Oil & Gas Forecast, which forecasts offshore oil and gas production to grow from 39 MMboe/d in 2004 to 55 MMboe/d by 2015. From providing around 34% of global oil production and 28% of global gas production in 2004, offshore oil and gas are forecast to reach 39% and 34% respectively by 2015.
The full costs to explore for, develop, and operate offshore oil and gas fields, presently some $111 billion per year, are forecast to total $1.44 trillion over the next decade. During this time it is estimated that 200 Bboe will be produced.
"In recent years offshore oil and gas production growth has been constant and rapid. Offshore output is expected to be some 27 MMb/d of oil and 750 bcm of gas in 2004. It is forecast to grow to 33 MMb/d and nearly 1,300 bcm per year by 2015. It is interesting to see how expenditures are being rapidly re-directed from mature to immature countries to permit this growth. I think the extent of the shift will have a massive effect on where and what type of equipment and services will be required," notedEnergyfiles technical director Dr. Michael R. Smith and the study's author.
"A most important trend is the move to deep waters. For example, nearly 25% of offshore oil will come from deep waters in 2015 compared to just 10% in 2004. Most significantly, after 2010 all global offshore oil production growth will be from deep waters, compensating for declining output from shallow waters.
Referring to the shift in regional activity Smith points out that "true offshore oil production began in North America in 1938 and since then all regions have seen some expansion but most rapidly from Western Europe, mainly the North Sea. In 2004 Western Europe was providing 21% of all offshore oil but is forecast to be providing just 11% by 2015. The Middle East, due to its large reserves, and Africa and Latin America, due to their deep waters, are forecast to be contributing the largest shares by 2015, with 21%, 19%, and 18% respectively.
"Unlike oil, offshore gas output will continue to rise from both shallow and deep waters and in terms of oil equivalent by 2015 gas is expected to be providing 40% of offshore volumes. A large increase in supply is forecast from the Middle East, almost entirely attributable to the giant South Pars/North field straddling the Iranian/Qatari border. In addition around 12% of global offshore gas will be coming from deep waters, compared to 7% in 2004.
"The growth in importance of gas, and offshore gas in particular, will drive an unprecedented increase in expenditure on gas infrastructure, including pipelines, LNG plants, gas-to-liquid processing plants, tanker transport, and loading and unloading terminals."
The expenditure forecasts in the report are given in 2004 money assuming continued low inflation. It is also assumed that upward cost pressures from inflation and a higher oil price environment will, as in the past, be roughly counter-balanced by downward cost pressures through improved technology and better cost-cutting strategies.
Nevertheless, according to report series editor John Westwood, "over the longer term a sustained increase in oil prices is likely as a global energy supply gap develops and real cost increases materialise which could lead to additional expenditure growth."
"Although this may in part result from the service industry achieving higher priced contracts, we think there will also be two other effects. Firstly, governments owning the remaining high potential producing areas will expect higher takes and secondly the increase in the number of marginal developments brought onstream and (thirdly) efforts to increase recovery factors will inevitably lead to a greater number of lower production rate wells than have traditionally been required offshore."