(EnergyAsia, March 28 2011, Monday) — UK-based energy consultant Douglas-Westwood has forecast a massive 79% growth in the deepwater sector’s capital expenditure to US$206 billion for the 2011-2015 period compared to the previous five years.
In announcing the launch of its new deepwater service, the company said drilling and completion expenditure is expected to be more than double the previous five-year period, with subsea equipment expected to see 70% rises over the same period.
Subsea construction, umbilicals, risers and flowlines (SURF) and floating production sectors are also expected to see increased levels of expenditure as operators require complex and highly-engineered production solutions to tap their deepwater prospects, the company said.
Floating production, the principal form of development of deepwater reserves, is expecting 80 units to be installed over the 2011-2015 period, the majority of which will be floating production, storage and offloading (FPSO) vessels.
Douglas-Westwood said the overall outlook for the business is one of significant long-term opportunity. Political intervention and uncertainty is not a new challenge for the oil industry but it does threaten to over-shadow the technical progress in recent years that has resulted in remarkable feats of engineering and the ability to explore for oil in water depths of up to 3,000 metres.
The company said international oilfield service and equipment vendors could benefit substantially while exploration and production (E&P) companies will face economic challenges from working on increasingly capital-intensive deepwater projects.
Steve Robertson, Douglas-Westwood director and head of oil and gas, said:
“We expect African and Latin American developments to drive the forecast growth. African developments are largely concentrated on Angola and Nigeria. Latin America is likely to experience substantial growth, exceeding Africa’s deepwater expenditure towards the end of the forecast period, driven by Petrobras’ development of its Campos and Santos (pre-salt) fields off Brazil. There are some interesting prospects in North Africa but these may be hampered in the short-term by the present political uncertainties.
“A large cloud of political uncertainty also continues to sit stubbornly over the US Gulf of Mexico (GoM) following the Macondo spill in 2010. Recovery is expected in the US Gulf over the next five years but at present activity levels are depressed and contractors continue to report that the region is difficult. The outlook for 2012 is poor with recovery expected from 2013 onwards. There is a risk that the present administration could limit deepwater activity in favour of development of unconventional onshore reserves instead.”
Steve Kopits, managing director of Douglas-Westwood LLC in New York, said in a presentation to the US House of Representatives Energy Subcommittee:
“US GoM oil production has fallen significantly since Macondo and within two years of the accident it will be 35% lower – that represents a fall in overall US production of 11%. Meanwhile, unconventional plays such as those in the Bakken area have potential to add up to one million b/d or more.”
Douglas-Westwood said its new deepwater service presents country-by-country and component-led analysis based on proprietary data, including historic and forecast expenditure for previous and next five years, discussion of development projects within each region, review of market drivers and an explanation of trends and themes in the market.
With the option of quarterly updates and dedicated real time support, the company said the research service is aimed at strategy departments, senior management, mergers and acquisition (M&A) teams and business acquisition executives within the deepwater sector.