Nearly $25 billion will be devoted to deepwater development every year between 2008 and 2012, and the North American region will account for more than 25% of the spending, according to a study by energy consultant Douglas-Westwood Ltd.

In its study, “The World Deepwater Market Report 2008-2012,” the UK-based firm said the deepwater oil and natural gas industry is set for continued growth, with more than 30% growth worldwide between 2008 and 2012 compared with the previous five years.

“Deepwater oil production currently accounts for almost 15% of total offshore production, but over the next few years its share relative to shallow water output will grow — accounting for around 20% of offshore production by 2011,” said Managing Director John Westwood.

Africa is forecast to be the leading development area for deepwater expenditures, accounting for about 40% of total spending. In Latin America, Brazil’s offshore waters will dominate, with national operator Petrobras pioneering the use of innovative technology to achieve production from “tremendous water depths,” said the consultant. Overall, the Latin American region will account for almost 20% of world deepwater development spending over the next four years.

“The North America region is expected to account for over 25% of deepwater development capex [capital spending] over the 2008-2012 period,” said Westwood. “With a few notable exceptions, deepwater fields in the U.S. Gulf of Mexico tend to be smaller than those in other deepwater ‘hotspots’ such as Brazil or West Africa. The region’s extensive offshore infrastructure and the relative proximity of supply and service centers have a significant influence on E&P [exploration and production] activity, turning otherwise marginal prospects into viable commercial propositions. These factors also mean that project lead times tend to be shorter than in other regions.”

The consultant noted that North America’s deepwater “saw a great deal of activity over the 2003-2007 period, including the completion of 192 subsea wells and 86 surface-completed wells. A total of 17 deepwater platform installations were completed and 6,725 kilometers (km) of pipelines were laid. This activity required some $26.6 billion of capital expenditures to complete.”

Over the 2008-2012 period, Douglas-Westwood anticipates “a good level of activity will be maintained” in the GOM. “Although there is a large reduction in total pipeline lengths installed (from 6,725 km to 3,677 km), increases in the cost of deepwater pipeline installation, as well as some larger diameter installations, in the Gulf of Mexico will compensate for this — with capex only reducing from $8.7 billion to $8.1 billion.

“This will form a large part of $27.4 billion capex for the forecast period — a 3% increase on capex for 2003-2007,” according to the study. “The deepwater floating production sector is, however, expected to be a growth area, with 19 units expected to be installed over the period, requiring a spend of some $6.4 billion.”

The “Golden Triangle” of deepwater — Africa, the GOM and the Brazilian areas — still will account for 84% of deepwater spending, “but the rapid emergence of Asia as a significant deepwater region should not be overlooked,” the study noted. “Indonesia, Malaysia and India all have development prospects on screen for the 2008-2012 period and the region should account for 10% of deepwater capex during this time.”

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