CANTERBURY, ENGLAND — A study published today by energy business analysts Douglas-Westwood forecasts that the deepwater oil and gas sector will spend US$162 billion over the period 2009 to 2013. West Africa, the Gulf of Mexico and Brazil will account for about 75 percent of the global expenditure, according to the report.
Commenting on the report, The World Deepwater Market Report 2009-2013, Douglas-Westwood Oil & Gas Manager Steve Robertson said, “Overall, despite more moderate levels of expenditure during 2009 and 2010 relative to 2008, the deepwater sector is forecast to continue its growth trend, with annual expenditure reaching over $35 billion by 2013. The bulk of deepwater developments are being led by major oil companies and well-placed NOCs that we believe will not be hit by the economic downturn and turmoil in the debt markets to the same extent as most smaller players.”
Robertson noted that some impact on the sector may be felt through deepwater operators that are reliant on external project finance, and some project delays are inevitable until the financial markets become more settled.
“Oil prices appear to be less of an issue at present, Robertson added. “Our survey of deepwater operators indicates that most are planning against conservative assumptions and expect oil prices to recover to $50-70/bbl in the medium-term.”
Douglas-Westwood Analyst Thom Payne said that while the so-called “Golden Triangle” of Africa, the Gulf of Mexico and Brazil, account for the bulk of the expected expenditures, the emergence of Asia as a significant region for deepwater activity should not be overlooked. Douglas-Westwood forecasts that expenditure in the region over the 2009-2013 period will increase by 90 percent when compared to 2004-2008, accounting for 9 percent of the forecast global spend.
Payne said, “Three main elements dominate spend over the forecast period, namely pipelines, the drilling and completion of development wells, and platforms. Pipelines and control lines will continue to play a vital role in providing the necessary infrastructure for deepwater developments. The opening up of reserves further from the coast and the incorporation of satellite fields into deepwater hubs will drive expenditure with a total forecast spend of US$57.7 billion. Expenditure on the drilling and completion of subsea development wells will amount to US$53.8 billion. These two components of activity account for nearly 70 percent of all expenditure.”
Payne notes that the number and cost of deepwater floating production platforms is also set for major growth, with a total of 86 units forecast at a cost of US$38.2 billion.
“Overall, we retain a positive outlook on the deepwater sector; ultimately this is where the majors need to play to secure significant reserve replacement and incremental production and there are simply not enough world-class opportunities elsewhere,” Payne said. “We believe those that are currently active in this sector are most sheltered from the financial and economic turmoil and that as a result the sector will continue to be a promising long-term business area throughout the oil sector value chain.”