Posted on 04.08.2008 - 14:00 EDT in GENERAL NEWS by Rons_ROV_Links
This headline forecast appears in the new, fully updated edition of the World Offshore Oil & Gas Production and Spend Forecast 2008-2012 published today by Douglas-Westwood and Energyfiles. With Capex and Opex in the offshore environment responsible for the lion's share of spending in the upstream oil and gas sector, the report delivers a detailed analysis of future prospects for offshore oil and gas production, forecasting the world market by region and type of activity.
Offshore oil and gas production has risen rapidly over the last decade. Derived from the Energyfiles Global Databases, the data show that output is expected to reach 30 million barrels per day in 2008 with gas production having risen to 988 Bcm per year; representing rises of 22% and 55% respectively since 2000. Continued steady increases in oil production and escalating gas production up to 2012, albeit hampered by extraordinary increases in costs, will drive industry offshore annual expenditure up from near $250bn in 2007 to over $350bn in 2012.
"To attain such growth the industry will have to look and spend in every far-flung part of the world but it is not only rising production that is driving spending," maintains report author Dr Michael R. Smith of Energyfiles. "Costs have risen hugely in the last few years on the back of higher energy prices, and, of course, allied to the need to exploit much more expensive environments.
"Where a decade ago fixed platform developments in the North Sea, the shallow waters of the Gulf of Mexico and the relatively benign environments of the South China Sea attracted much of the spending, now billions are directed at expensive deep water and deep reservoir environments - usually using complex subsea solutions, remote gas developments and subsea wells that scavenge for satellite accumulations in the traditional areas."
"The only significant exceptions are in the low cost Persian Gulf and moderate cost Caspian Sea. In the former, the OPEC countries are dramatically increasing their expenditure as they struggle to increase capacity to take advantage of the tight, light, oil supply market as well as the strength of global LNG for which demand is rocketing."
Deep water production additions are increasing in all regions where such prospects exist. In particular, additions in West Africa have shown considerable growth. Shallow water additions are only increasing in the Middle East and in a scattering of countries elsewhere, especially supported by new marketed gas production. "Deep water is also one of the few remaining situations offering potential for major oil discoveries," said Steve Robertson, head of oil & gas at Douglas-Westwood. "This is particularly important for the major international oil companies as their shallow water reserves deplete and the major onshore reserves are increasingly controlled by national oil companies. In the 1970s the oil majors controlled 80% of the world's oil reserves, but nowadays the 80% in controlled by state companies."
"Whatever the reason for the high oil price right now - and there are many," said Dr Smith "related to both above and below-ground circumstances, the end product is one of large profits and slowing oil demand in the developed world. But spending will just keep on going up because of the much more expensive developments that must be exploited. What's more, most of these high technology sectors of the offshore industry will continue to be equipment and people resource-constrained.
"So even with exceptional growth, companies need to remain selective in the areas in which they concentrate and the services they offer and develop. When times are good future direction often gets lost in the excitement of apparently ever-increasing profits. But, with cash available, this is the very time when properly thought-out and focused strategies can be most effective."