Despite falling commodity prices, the deepwater U.S. Gulf of Mexico (GOM) will capture about 20% of oil and natural gas spending over the next five years, with the global spending averaging more than $27 billion a year between 2009 and 2013, according to a study by UK-based Douglas-Westwood.
The "Golden Triangle" of Africa, the GOM and Brazil "will account for three-quarters of global deepwater expenditure over the forecast period," the report found.
"Although we expect some small decline in 2009, thereafter the deepwater oil and gas industry is set for renewed growth, with annual capital expenditures [capex] reaching nearly $31 billion in 2011," said Chairman John Westwood. He detailed findings in the "World Deepwater Market Report 2009-2013" at the Deep Offshore Technology Conference in Perth, Australia.
The estimated jump in deepwater spending from 2009 to 2013 would be 45% more than in the previous five years, Westwood explained. "Deepwater currently accounts for over 15% of total offshore oil production, but over the next few years its relative share will rise to over 20%."
Although Africa will account for "nearly 40%" of the deepwater spending in the next five years, the U.S. Gulf of Mexico's "extensive offshore infrastructure and the relative proximity of supply and service centers" will "have a significant positive influence" on exploration and production, "turning otherwise marginal prospects into viable commercial propositions," said Westwood.
GOM deepwater exploration is expected to account for about 20% of the global spending over the period, the study concluded.
Since the country's "first 'deepwater elephants,' Africa has emerged as perhaps the most significant deepwater region in the world, with some stunning successes in recent years, such as Girassol, Xikomba and Kizomba," he noted.
Meanwhile, Latin America is expected to attract a "similar share" to the United States, Douglas-Westwood reported.
"Latin America's deepwater activity is dominated by Brazil with its national operator Petrobras, which has been pioneering the use of innovative technology to achieve production from tremendous water depths," said Westwood. "Overall, the region is expected to account for nearly 20% of world deepwater development spend over the 2009-2013 period. Beyond 2013, we expect Brazilian spend to reach new heights as the recently discovered 'pre-salt' giant fields are developed."
The emergence of Asia as a "significant" deepwater region should not be overlooked, noted Westwood. "Indonesia, Malaysia and India all have development prospects on screen for the 2009-2013 period and the region should account for nearly 10% of deepwater capex. Western Europe will maintain its market share, but growing activity will see actual expenditure increasing over 30%."
In terms of deepwater hardware, floating production system growth is expected to jump from its historic rate of around 22%/year to 28% over the forecast period, the study found
"Surface wells' share is set to decrease from 4% to 1%, with all other components, including subsea wells remaining stable," said Westwood. "Combined, subsea wells and platforms, at $92 billion, are forecast to represent 67% of expenditure."
Information on the study, to be released in January, is available at www.dw-1.com.
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