Offshore Drilling Industry in the Americas to 2015 - New Deepwater Discoveries and Stringent Offshore Regulations Affecting the Future Industry Outlook by GBIResearch

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									            Offshore Drilling Industry in the Americas to 2015 - New
           Deepwater Discoveries and Stringent Offshore Regulations
                     Affecting the Future Industry Outlook
      Reference Code: GBIGE00036MR                                                                               Publication Date: August 2010

       Offshore drilling                   The global offshore drilling market experienced a slowdown in 2009 following the hectic activity
       expenditure in the                  witnessed in the previous years. The growth of the offshore drilling market is being driven by high
       Americas is expected to             demand and the prices of crude oil and natural gas. The increase in the demand for oil and natural
       rise steadily to around             gas due to the high economic growth during the period from 2004 to 2008 was responsible for the
       US$32.9bn by 2015                   continuous increase of crude oil and natural gas prices until mid 2008. The demand for oil and gas
                                           and the sustained high prices stimulated increased activity in the offshore drilling market.
                                           However, since the economic slowdown and the collapse of the oil and gas prices from record
                                           levels of 2008, many of the offshore projects have become uneconomical and have since been
                                           delayed or cancelled. This is because the offshore drilling expenditure is directly dependent on the
                                           exploration and production capital spending of the international oil companies, national oil
                                           companies and independent producers. The tight credit situation and an uncertain outlook for the
                                           oil and gas global demand have affected the capital expenditure plans of the exploration and
                                           production companies. These factors had a negative effect on the offshore drilling expenditure in
                                           2009. However, the outlook for offshore drilling is encouraging and the expenditure is expected to
                                           steadily increase to 2015.
                                           Offshore Drilling Expenditure in the Americas Is Expected to Continue to Increase to 2015
                                           After a Dip in the Previous Two Years
                                           The major offshore oil and gas fields in the Americas are the Gulf of Mexico, off the US coast, the
                                           Newfoundland and Nova Scotia oil fields off the Canadian coastline, the Gulf of Mexico off the
                                           Mexican coast, and the Campos and Santos Basins off the coast of Brazil. The offshore basins of
                                           the islands of Trinidad and Tobago are rich in natural gas reserves. The Carina Aries and Perla oil
                                           field shallow water blocks off the Argentine and Venezuelan coasts, respectively, are abundant in
                                           natural gas reserves.
                                           Other countries in the Americas which have offshore drilling investment potential are Suriname, the
                                           Falkland Islands, Uruguay, Cuba, Peru and Ecuador. Recent exploration attempts in the search for
                                           oil and gas reserves have indicated the potential oil and gas reserves in these countries.
                                           Offshore drilling expenditure in the Americas is expected to rise steadily to around US$32.9bn by
                                           2015, over the period 2010-15, from the 2009 expenditure of US$19.2bn, except for a small drop in
                                           expenditure levels in 2010, due to the impact of the offshore drilling moratorium imposed in the
                                           United States.
                                           Hectic shallow water activity off the South and Central American coasts are expected in the period
                                           2010-15, as a result of previous as well as expected exploration investments off the coasts of
                                           Brazil, Mexico, Trinidad and Tobago, Venezuela, and newer regions such as Falkland Islands and
                                           Suriname.




 Offshore Drilling Industry in the Americas to 2015 - New Deepwater                                          GBIGE00036MR / Published AUG 2010
Discoveries and Stringent Offshore Regulations Affecting the Future
Industry Outlook                                                                                                                             Page 1
                                                                              © GBI Research. This is a licensed product and is not to be photocopied
                                             Offshore Drilling Expenditure, by Water Depth, The Americas ($ bn), 2000–2015

                                                                            35.0



                                                                            30.0



                                                                            25.0




                                                    Drilling Spend, US$bn
                                                                            20.0



                                                                            15.0



                                                                            10.0



                                                                             5.0



                                                                             0.0
                                                                                   2000 2001 2002 2003 2004 2005 2006 2007       2008 2009 2010 2011 2012 2013 2014 2015
                                                                                                                          Year

                                                                                                                 Shallow water     Deepwater


                                             Source: GBI Research



                                           Growth in Oil And Gas Demand in the Long Term and Increase in Offshore Oil and Gas
                                           Production are Driving the Growth of the Offshore Drilling Industry
                                           The global demand for oil and gas decreased in late 2008 and 2009 due to the global economic
                                           slowdown. However, with the expected recovery of the global economy led by the emerging
                                           economies of India and China, the demand for oil and gas is likely to recover in 2010. Further,
                                           corresponding to the global economic growth, the demand for oil and gas is also expected to
                                           continue to increase in the future. This will result in a corresponding increase in production,
                                           especially from the offshore regions. With the global crude oil and natural gas demand not
                                           expected to subside and the onshore reserves facing depletion, the offshore crude oil and natural
                                           gas production is only expected to increase in the future. The offshore oil and gas industry in the
                                           Americas is expected to continue to increase in the future. The offshore crude oil production in the
                                           Americas was 2,441.1 million barrels and the offshore natural gas production in the Americas was
                                           943.7 million boe in 2009.
                                           Increasing Deep and Ultra Deep Water Exploration and Production is Driving the Growth of
                                           the Offshore Drilling Industry
                                           In recent years, there has been an increase in deep and ultra deep water exploration. With the
                                           decline in the available resources in the onshore areas, there has been a marked shift towards
                                           increased offshore exploration. Initially, the offshore exploration was mainly in shallow waters.
                                           However, in recent years, with the near complete exploitation of the shallow water resources
                                           worldwide, companies have begun drilling deeper in the oceans.
                                           There have been huge deep water discoveries in various regions of Brazil, the USGOM (United
                                           States Gulf of Mexico). In the USGOM there has been decreased activity in the shallow water
                                           areas. Natural gas production, which was the mainstay of the shallow water activity in the USGOM,
                                           has steadily declined in recent years. As offshore natural gas production is expected to decline in
                                           the USGOM, shallow water activity is expected to decrease. Shallow water operations are also
                                           more likely to be affected by the economic downturn than the deep water areas, since the lease
                                           arrangements for the deepwater areas are typically longer and projects take more time to develop.
                                           Another major factor promoting the increased activity in the deep and ultra deep waters has been
                                           the advances in technology. The Perdido development operated by Shell is a classic example of
                                           advances in technology being put to good use. Perdido will be the deepest production platform in


 Offshore Drilling Industry in the Americas to 2015 - New Deepwater                                                                        GBIGE00036MR / Published AUG 2010
Discoveries and Stringent Offshore Regulations Affecting the Future
Industry Outlook                                                                                                                                                           Page 2
                                                                                                       © GBI Research. This is a licensed product and is not to be photocopied
                                           the world operating at depths of 8,000 feet under water. Petrobras’ Floating Production, Storage
                                           and Offloading (FPSO), which will be introduced next year, is a converted double-hulled tanker that
                                           can operate at extreme water depths and also will have a detachable turret buoy to be used during
                                           hurricanes while the FPSO can be moved to safer waters.
                                           These and other factors have been mainly responsible for companies reaching previously
                                           unreachable areas. Subsalt reserves, which are typically petroleum reserves thousands of meters
                                           below layers of sand and rocks and salt, contain huge reserves of oil. Recent sub-salt discoveries
                                           have transformed Brazil into a country with one of the highest potential investment acreages
                                           globally. The Tupi Field, which was discovered in November 2007, is the largest discovery in the
                                           Americas since 1970. It has estimated recoverable reserves of 5-8 billion barrels. This discovery in
                                           the pre-salt layer, which extends from the State of Espírito Santo to the State of Santa, is
                                           considered to be one of the most attractive exploration acreages worldwide. It will increase Brazil’s
                                           recoverable reserves of crude oil by 50%, which will significantly increase the revenues of the
                                           country’s oil and gas industry. Geological similarities between the subsalt areas in Angola and
                                           Brazil have increased the hopes of finding huge subsalt reserves in the continental shelf areas of
                                           Angola.
                                           As shallow water resources decrease, deep and ultra deep subsalt areas will play an increasing
                                           role in offshore oil and gas production. As the exploration and production activity moves into deeper
                                           water depths, the market for the services of the offshore drilling contractors, especially major and
                                           technically strong companies, will grow strongly.
                                           Offshore Drilling Industry in the US is Expected to be Temporarily Hampered by the New US
                                           Offshore Drilling Moratorium
                                           On May 30, 2010, in response to the Deepwater Horizon Oil Spill, popularly known as the BP oil
                                           spill, which occurred in the Gulf of Mexico, the US Secretary of the Interior, Ken Salazar, issued a
                                           moratorium on all deepwater offshore drilling on the outer continental shelf for a period of six
                                           months. According to the Obama administration, the immediate stalling of offshore drilling
                                           operations was necessary to protect the American environment, and to "provide time to implement
                                           new safety requirements" and allow a new commission charged with investigating the leak to do its
                                           work.
                                           Deepwater oil production in the Gulf was allowed to continue, albeit under closer oversight and with
                                           tighter safety requirements, even as the drilling and instigation of any new wells was halted.
                                           Categorically mentioning the need to eliminate real or perceived conflicts of interest in the Minerals
                                           Management Service, which oversees offshore drilling, in May, the US Secretary of the Department
                                           of the Interior, Ken Salazar, announced plans to split the agency into three parts: one to inspect
                                           rigs and enforce safety regulations; a second to oversee the leasing and development of offshore
                                           drilling; and a third to collect royalties from federal onshore and offshore leases, which average $13
                                           billion a year. The restructuring creates three new bodies: Ocean Energy Management, which will
                                           oversee the licensing of drilling permits; Safety and Environmental Enforcement; and Natural
                                           Resources Revenue, responsible for the collection of royalties.
                                           A review of offshore policies and regulations with regards to safety, environmental aspects, and
                                           crisis management and revision of offshore policies and regulations to stricter levels, has already
                                           begun in the US. One obvious change will be the push for stricter and inevitably more costly
                                           regulation to reduce risk and improve safety and damage to fragile environments.
                                           On July 12th, 2010, the Department of the Interior of the Obama-led US administration issued a
                                           new, conditional moratorium on deepwater offshore drilling, not based on water depth criteria as in
                                           the previous moratorium, but based on stringent safety standards to be followed by offshore
                                           exploration operators, drilling contractors, equipment providers, and oilfield service companies to
                                           ensure safe, accident-free, and environmentally friendly drilling activity in the future. Apart from new
                                           safety regulations, the new moratorium will allow time to examine the spill response capabilities of
                                           exploration companies to ensure the minimum possible damage to ecology in the vicinity of the
                                           drilling area. New penalty tax laws on oil spills are expected to be introduced in the wake of the
                                           offshore drilling moratorium.
                                           For the offshore drilling sector in the US, this will hamper business because of government
                                           interference. The six-month moratorium will also wipe out thousands of jobs and millions of dollars
                                           of income from the offshore drilling business.
                                           On the technical side, every catastrophic failure, especially those in technological frontiers, has
                                           always led to tremendous efforts to find the causes of such failures and to expediently develop new

 Offshore Drilling Industry in the Americas to 2015 - New Deepwater                                           GBIGE00036MR / Published AUG 2010
Discoveries and Stringent Offshore Regulations Affecting the Future
Industry Outlook                                                                                                                              Page 3
                                                                               © GBI Research. This is a licensed product and is not to be photocopied
                                           processes, procedures, superior materials and products to safeguard against repetition. Hence,
                                           tremendous progress can be expected in developing a much better understanding of the
                                           peculiarities of the highly challenging frontier environment of deep sea drilling and production,
                                           especially in the areas of extreme temperatures, pressures, the total absence of—or highly
                                           restricted—visibility, and extraordinary difficulty in performing mechanical tasks, and the
                                           subsequent development of new technologies, materials, approaches, processes, as well as
                                           internal and external guidelines.
                                           Further, every company will be expected to undertake all reasonable and feasible efforts to review
                                           and update its processes, policies, procedures, guidelines and applied technologies to effectively
                                           protect against catastrophic failures like the BP oil spill. The experience of this spill is expected to
                                           lead to an industry-wide task force to coordinate the development of effective technologies and
                                           applications in operations in highly volatile and hostile environments, as well as the establishment
                                           of an industry-wide emergency response task force.




 Offshore Drilling Industry in the Americas to 2015 - New Deepwater                                           GBIGE00036MR / Published AUG 2010
Discoveries and Stringent Offshore Regulations Affecting the Future
Industry Outlook                                                                                                                              Page 4
                                                                               © GBI Research. This is a licensed product and is not to be photocopied
                                           1 Table of Contents
                                           1 Table of Contents ........................................................................................................................ 5
                                             1.1    List of Tables..................................................................................................................... 8
                                             1.2    List of Figures ................................................................................................................... 9
                                           2 The Offshore Drilling Industry In The Americas To 2015........................................................... 10
                                             2.1    Report Guidance............................................................................................................. 10
                                           3 Introduction to the Offshore Drilling Industry.............................................................................. 11
                                             3.1    Significance of Offshore Drilling and Major Offshore Areas in the Americas .................. 11
                                             3.2    Impact of the Offshore Exploration Business on the Offshore Drilling Business ............. 11
                                             3.3    Importance of Various Local Government and Private Regulations Influencing the
                                                    Offshore Exploration and Drilling Business ..................................................................... 11
                                             3.4    Offshore Drilling Business Development and Key Bid Evaluation Criteria (BEC)............ 12
                                                3.4.1    Technical Suitability................................................................................................. 12
                                                3.4.2    Price ........................................................................................................................ 12
                                                3.4.3    Availability ............................................................................................................... 12
                                             3.5    The Offshore Drilling Industry and Its Role as a Part of the Upstream Oil and Gas
                                                    Industry Value Chain....................................................................................................... 12
                                             3.6    Types of Rig and Support Services................................................................................. 13
                                                3.6.1    Mobile Bottom Supported Rigs ................................................................................ 13
                                                3.6.2    Floating Rigs............................................................................................................ 13
                                                3.6.3    Key Technologies Used As Supporting Mechanisms in Floating Rigs..................... 14
                                                3.6.4    Subsea Production and Processing Systems .......................................................... 14
                                             3.7    Offshore Drilling Technology Concepts........................................................................... 15
                                                3.7.1    Exploratory Wells..................................................................................................... 15
                                                3.7.2    Appraisal Wells........................................................................................................ 15
                                                3.7.3    Development Wells.................................................................................................. 15
                                                3.7.4    Deepwater Drilling ................................................................................................... 15
                                                3.7.5    Rotary Drilling Procedures....................................................................................... 15
                                             3.8    Key Allied Segments Supplementing the Core Offshore Drilling Business ..................... 16
                                                3.8.1    Oilfield Services....................................................................................................... 16
                                                3.8.2    Geo-Scientific Support Services .............................................................................. 16
                                                3.8.3    Rig Support Services............................................................................................... 16
                                                3.8.4    Engineering and Equipment Support Services ........................................................ 16
                                           4 Key Trends and Challenges in the Offshore Drilling Industry of the Americas .......................... 17
                                             4.1    Key Drivers of the Offshore Drilling Industry of the Americas ......................................... 17
                                                4.1.1    C-NLOPB Fresh Bid Invitations amidst Stringent Regulation Reviews Signal Strong
                                                         Potential for Oil Exploration and Production Industry in Canada ............................. 17
                                                4.1.2    New Gas Discovery at Perla Oilfield Boosts Offshore Drilling Business Prospects in
                                                         Venezuela ............................................................................................................... 17
                                                4.1.3    Growth in Oil and Gas Demand in the Long Term and the Increase in Offshore Oil
                                                         and Gas Production are Driving the Growth of the Offshore Drilling Industry.......... 18
                                                4.1.4    Increasing Deep and Ultra Deep Water Exploration and Production is Driving the
                                                         Growth of the Offshore Drilling Industry................................................................... 18
                                                4.1.5    Rapid Technological Advances are a Key Driver of the Development of the Offshore
                                                         Drilling Industry........................................................................................................ 19
                                             4.2    Major Challenges in The Offshore Drilling Industry......................................................... 19
                                                4.2.1    Offshore Drilling Industry in the US is Expected to be Temporarily Hampered Due to
                                                         the New US Offshore Drilling Moratorium................................................................ 19
                                                4.2.2    Gulf Oil Spill Leading to Stiffer Technical Standards, Which Will Have an Impact on
                                                         the Offshore Drilling Business in the US.................................................................. 20
                                                4.2.3    Global Economic Slowdown and Low Commodity Prices are a Challenge for the
                                                         Growth of the Offshore Drilling Industry in the Short Term ...................................... 20
                                                4.2.4    Decreases in Exploration and Production Capital Expenditure is a Major Challenge
                                                         for the Offshore Drilling Contractors ........................................................................ 22
                                                4.2.5    Highly Competitive Drilling Industry with Intense Price Competition in Addition to the
                                                         Decrease in the Drilling Activity will be a Major Challenge ...................................... 23

 Offshore Drilling Industry in the Americas to 2015 - New Deepwater                                                                   GBIGE00036MR / Published AUG 2010
Discoveries and Stringent Offshore Regulations Affecting the Future
Industry Outlook                                                                                                                                                                Page 5
                                                                                             © GBI Research. This is a licensed product and is not to be photocopied
                                                    4.2.6      Argentina Struggling To Attract Investors Because Of Low Geological Attractiveness
                                                                ................................................................................................................................ 23
                                             4.3        Mergers and Acquisitions in the Offshore Drilling Industry in the Americas .................... 23
                                           5 Offshore Drilling Forecast for the Americas to 2015 .................................................................. 26
                                             5.1        Offshore Drilling Expenditure Forecast for the Americas To 2015 .................................. 26
                                             5.2        Offshore Drilling Expenditure Forecast for the Americas by Region, 2000–2015 ........... 28
                                             5.3        Offshore Well Forecast for the Americas To 2015 .......................................................... 30
                                             5.4        Offshore Well Forecast for the Americas To 2015, by Region ........................................ 31
                                             5.5        Profiles of the Major Offshore Drilling Contractors in the Americas ................................ 33
                                                 5.5.1         Transocean Ltd........................................................................................................ 33
                                                 5.5.2         Noble Corporation ................................................................................................... 34
                                                 5.5.3         Diamond Offshore Drilling ....................................................................................... 34
                                                 5.5.4         Ensco International.................................................................................................. 35
                                                 5.5.5         Seadrill .................................................................................................................... 35
                                           6 Key North American Countries’ Offshore Wells and Drilling Expenditure Statistics................... 36
                                             6.1        North America, Offshore Drilling Forecast To 2015 ........................................................ 36
                                                 6.1.1         North America, Offshore Drilling Expenditure Forecast To 2015, by Water Depth .. 36
                                                 6.1.2         North America, Offshore Drilling Expenditure Forecast To 2015, by Country.......... 38
                                                 6.1.3         North America Offshore Wells Forecast To 2015 .................................................... 40
                                                 6.1.4         North America Offshore Wells Forecast to 2015, by Country .................................. 42
                                             6.2        The US, Offshore Drilling Wells Statistics and Expenditure To 2015 .............................. 43
                                                 6.2.1         The US, Offshore Wells Forecast, 2000–2015 ........................................................ 44
                                                 6.2.2         The US, Offshore Drilling Expenditure, by Water Depth, 2000–2015 ...................... 45
                                                 6.2.3         The US, Top Lease Holders, 2009 .......................................................................... 47
                                             6.3        Canada, Offshore Drilling Expenditure, Forecast To 2015.............................................. 48
                                                 6.3.1         Canada, Offshore Wells, Historical Figures and Forecast, 2000–2015 ................... 48
                                                 6.3.2         Canada, Offshore Drilling Expenditure, by Water Depth, 2000–2015...................... 50
                                                 6.3.3         Canada, Top Lease Holders, 2009.......................................................................... 51
                                           7 Key South and Central American Countries’ Offshore Wells and Drilling Expenditure Statistics
                                              .................................................................................................................................................. 52
                                             7.1        South and Central America, Offshore Drilling Forecast To 2015 .................................... 52
                                                 7.1.1         South and Central America, Offshore Drilling Expenditure, Forecast To 2015, by
                                                               Water Depth ............................................................................................................ 53
                                                 7.1.2         South and Central America, Offshore Drilling Expenditure, Forecast to 2015, by
                                                               Country .................................................................................................................... 55
                                                 7.1.3         South and Central America, Offshore Wells, Forecast To 2015 .............................. 57
                                                 7.1.4         South and Central America, Offshore Wells, Forecast to 2015, by Country ............ 59
                                             7.2        Brazil, Offshore Drilling Wells, Statistics and Expenditure To 2015 ................................ 61
                                                 7.2.1         Brazil, Offshore Wells, Forecast, 2000–2015 .......................................................... 61
                                                 7.2.2         Brazil, Offshore Drilling Expenditure, by Water Depth, 2000–2015 ......................... 63
                                                 7.2.3         Brazil, Top Lease Holders, 2009 ............................................................................. 65
                                             7.3        Venezuela, Offshore Drilling Wells, Statistics and Expenditure To 2015 ........................ 66
                                                 7.3.1         Venezuela, Offshore Wells, Forecast, 2000–2015 .................................................. 66
                                                 7.3.2         Venezuela, Offshore Drilling Expenditure, by Water Depth, 2000–2015 ................. 68
                                                 7.3.3         Venezuela, Top Lease Holders, 2009 ..................................................................... 69
                                             7.4        Argentina, Offshore Drilling Wells, Statistics and Expenditure To 2015.......................... 70
                                                 7.4.1         Argentina, Offshore Wells, Forecast, 2000–2015 .................................................... 70
                                                 7.4.2         Argentina, Offshore Drilling Expenditure, by Water Depth, 2000–2015................... 71
                                                 7.4.3         Argentina, Top Lease Holders, 2009 ....................................................................... 73
                                             7.5        Trinidad and Tobago, Offshore Drilling Wells, Statistics and Expenditure, 2000–2015 .. 74
                                                 7.5.1         Trinidad and Tobago, Offshore Wells, Forecast, 2000–2015 .................................. 74
                                                 7.5.2         Trinidad and Tobago, Offshore Drilling Expenditure, by Water Depth, 2000–2015 76
                                                 7.5.3         Trinidad and Tobago, Top Lease Holders, 2009 ..................................................... 78
                                             7.6        Mexico, Offshore Drilling Wells, Statistics and Expenditure To 2015.............................. 79
                                                 7.6.1         Mexico, Offshore Wells Forecast, 2000–2015 ......................................................... 79


 Offshore Drilling Industry in the Americas to 2015 - New Deepwater                                                                         GBIGE00036MR / Published AUG 2010
Discoveries and Stringent Offshore Regulations Affecting the Future
Industry Outlook                                                                                                                                                                        Page 6
                                                                                                © GBI Research. This is a licensed product and is not to be photocopied
                                                7.6.2    Mexico, Offshore Drilling Expenditure, By Water Depth, 2000–2015 ...................... 81
                                                7.6.3    Mexico, Top Lease Holders, 2009 ........................................................................... 83
                                           8 Appendix ................................................................................................................................... 84
                                             8.1    Methodology ................................................................................................................... 84
                                                8.1.1    Coverage ................................................................................................................. 84
                                                8.1.2    Secondary Research ............................................................................................... 85
                                                8.1.3    Primary Research.................................................................................................... 85
                                                8.1.4    Expert Panel Validation ........................................................................................... 85
                                             8.2    Abbreviations .................................................................................................................. 85
                                             8.3    Contact Us ...................................................................................................................... 86
                                             8.4    About GBI Research ....................................................................................................... 86
                                             8.5    Disclaimer ....................................................................................................................... 86




 
								
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