Daily offshore oil and natural gas production worldwide, which currently stands at about 43 million boe, will grow to 53 million boe in 2010, which in turn will drive forecasted worldwide annual oil company spending from $193 billion to $248 billion, according to a new study by Douglas-Westwood Ltd. But the authors warned that resource-limited growth will be an increasing concern in the coming years.
"Only the most demanding environments in ultra-deep waters and Arctic regions are expected to offer new large-scale opportunities by the end of the period," said Michael R. Smith, who was the study's lead author. However, "offshore gas still has opportunities related to the advent of new gas production and conversion technologies, the growth of gas markets in the developing world, [and] the pressures by all governments to eradicate gas flaring."
Liquefied natural gas projects and the emerging gas-to-liquids industry "are kick-starting the development of stranded gas fields that have been lying fallow for many years and are also encouraging new exploration drilling in gas-prone areas," said Smith.
The UK-based energy firm, using information gleaned from its "Energyfiles" databases, presented the new study, "The World Offshore Oil and Gas Production and Spend Forecast," at the Offshore Technology Conference in Houston, which kicked off on Monday. The databases, according to Douglas-Westwood, annually review bottom-up long-term historic and forecast production, consumption and activity data compiled from more than 100 sources to minimize discrepancies and falsehoods.
"High oil and gas prices over the period to 2010 will result in continued strong growth in the offshore oil and gas sector," said John Westwood, managing director. "Over the next five years, we expect annual capital expenditures to increase by 10% from just under $110 billion in 2006 to $120 billion in 2010, but the real star of the show will be the less glamorous operational sector, with a forecast growth of 53%, from $83 billion to $127 billion."
Smith noted the "offshore trends are increasing rapidly, but there are considerable differences across the regions." He said there was an increasing shortage of lower-cost prospects in every drilling region but the Persian Gulf, along with a "limited" number of deepwater sedimentary areas except for Brazil, the Gulf of Mexico and West Africa. The study forecasts West Africa to show the "greatest growth."
New activity in the mature offshore regions "will increasingly become dominated by existing and new start-up small oil companies (along with the relevant national oil companies), as producing and exploration assets are acquired by smaller companies that specialize in marginal field developments and in scavenging for tail-end production."
A shortage of equipment and people also will be particular concerns for the offshore industry, said Douglas-Westwood. "Day rates will remain high, especially for capital assets such as high specification drilling rigs and other vessels. The experienced personnel needed to design, build and operate drilling and production equipment will also command a growing premium."
Accessing human resources will be a challenge, said Westwood. "The 'skills shortage' may in time be addressed as new people enter the industry attracted by higher salaries," he said. "But the 'experience shortage' is far more challenging, and there exists a growing potential for both technical and strategic mistakes to be made by inexperienced personnel acting in an environment of rapid technology advances."
For more information about the study, contact Lesley Lindsay-Watson at email@example.com.
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