Offshore Spending

Offshore By Rita Tubb, Managing Editor sector, the report analyzes future prospects for offshore production, forecasting the 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, oil output is expected to reach 30 MMbpd in 2008 with gas production having risen to 988 Bcm/y; 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 nearly $250 billion in 2007 to over $350 billion 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 and 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% is 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- Offshore Spending More Than Doubles In A Decade Global Offshore Spending 2003-2012 Driven by record high prices, the frenzied search for and development of new oil and gas supplies in ever more challenging areas is expected to lead to offshore industry spending rising to $840 billion Capex and $715 billion Opex respectively over the five-year period to 2012 in comparison to the $550 billion and $390 billion estimated to have been spent in the previous five years. These are the latest spending projections in the fully updated edition of the World Offshore Oil & Gas Production and Spend Forecast 2008-2012, from Douglas-Westwood and Energyfile. With Capex and Opex in the offshore environment responsible for the lion’s share of spending in the upstream oil and gas Pipeline & Gas Journal / August 2008 / www.pgjonline.com 87 Offshore ground circumstances, the end product is one of large profits and slowing oil demand in the developed world. But spending will 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.” The report and additional material, charts and tables on countries, sectors and markets is available from: E-mail: publications@dw-1.com; Phone: +44 1227 780999; www.dw-1.com The objective of study was to assess technically feasible options for oil and gas operations on the U.S. Outer Continental Shelf, in particular those areas in the Beaufort, Chukchi and Bering seas. The assessment encompassed exploration and production and included fixed platforms, artificial islands, floating structures and subsea infrastructure, including pipelines. The results will provide guidance for future exploration and development technologies. New ways to withstand the harsh environment of the Arctic region prompted J P Kenny’s Advanced Engineering Group (AEG) to develop a new module for its SIMULATOR Arctic toolkit. The module replicates the response of buried pipeline under ice-gouging conditions. Results of the IMVPA study can be found at www.mms.gov/tarprojects/584.htm northern European and international drilling campaign. Stena Carron is capable of drilling in water depths of up to 10,000 feet and has a total drilling depth of up to 35,000 feet. Stena Carron Near Completion In South Korea Stena Drilling Ltd. recently held a naming ceremony for the second of four state-of-the-art dual mast, dynamically positioned, ultra deepwater drillships, the Stena Carron, at Samsung Heavy Industries’ shipyard in Geoje, South Korea. The drillship was named by Letitia Payne, wife of Dave Payne, vice president of drilling and completions, Global Upstream, Chevron — which will utilize the vessel in a five-year Studies Aimed At Aiding Arctic E&P Operations IMV Projects and J P Kenny, both members of the John Wood Group, recently completed projects to aid Arctic exploration and development in the oil and gas industry. In January, IMV Projects’ Newfoundlandbased operations, IMV Projects Atlantic (IMVPA), completed a key study for the U.S. Minerals Management Services (MMS) titled “Arctic Offshore Technology Assessment of Exploration and Production Option for Cold Regions of the U.S. Outer Continental Shelf.” Norway To Hold 20th Licensing Round Norway’s Ministry of Petroleum plans to hold its 20th licensing round in November. Some 79 blocks or parts of blocks will be offered, 51 in the Norwegian Sea and 28 in the Barents Sea. Sissel Eriksen, NPD’s exploration director, said both areas hold potential. Blocks in the Barents Sea are believed important for further exploration while those in the Norwegian Sea may have potential for new discoveries. Application deadline is Nov. 7 and awards are scheduled for spring. P&GJ Pipeline & Gas Journal / August 2008 / www.pgjonline.com 89