Offshore oil and natural gas production is forecast to grow to 55 MMboe by 2015, up from its current 39 MMboe/d, with nearly all of the surge coming from deepwater, according to a new study by London-based consultant Douglas-Westwood. Offshore gas production will provide 34% of the world’s resources by then, up from its current 28%, while oil production will provide 39%, up from 35%.
The full costs to explore for, develop and operate offshore oil and gas fields, which now are close to $111 billion a year, are expected to total $1,449 billion over the next decade, according to The World Offshore Oil & Gas Forecast. During those 10 years, Douglas-Westwood estimates that 200 billion boe will be produced.
Michael R. Smith, who authored the study, said, “in recent years, offshore oil and gas production has been constant and rapid.” Offshore output is now expected to be 27 million bbl/d of oil and 26,486 MMcf of gas in 2004, and it is forecast to grow to 33 million bbl/d and nearly 45,909 MMcf by 2010.
“Unlike oil, offshore gas output will continue to rise from both shallow and deep waters, and in terms of oil equivalent by 2015, gas is expected to be providing 40% of offshore volumes,” Smith noted. He said a “large increase” in supply is forecast to come from the Middle East, “almost entirely attributable to the giant South Pars/North field straddling the Iran/Qatar border. In addition, around 12% of global offshore gas will be coming from deep waters, compared to 7% in 2004.”
The “growth in importance in gas, and offshore gas in particular,” will drive an unprecedented increase in expenditure on gas infrastructure, including pipelines, liquefied natural gas plants, gas-to-liquid processing plants, tanker transport and loading and unloading terminals. He said it was “interesting to see how expenditures are being rapidly re-directed from mature to immature countries to permit this growth. I think the extent of the shift will have a massive effect on where and what type of equipment and services will be required.”
The “most important trend is the move to the deepwaters. For example, nearly 25% of offshore oil will come from deep waters in 2015 compared to just 10% in 2004. Most significantly, after 2010, all global offshore oil production growth will be from deep waters, compensating for declining output from shallow waters.”
There also is a continued shift in where oil and gas are produced. Although “true” offshore oil production began in North American in 1938, since then, all regions have seen some expansion, but most rapidly from Western Europe. In 2004, Western Europe will provide about 21% of all offshore oil, but it is forecast to be providing just 11% by 2015. By then, the Middle East will be providing 21%, Africa, 19% and Latin America, 18%, according to the report.
Expenditure forecasts in the report are given in 2004 money, assuming continued low inflation. The report also assumed that upward cost pressures from inflation and a higher oil price environment will roughly counter-balance downward cost pressures through improved technology and cost-cutting strategies. Nevertheless, series editor John Westwood noted that, “over the longer term, a sustained increase in oil prices is likely as a global energy supply gap develops and real cost increases materialize, which would lead to additional expenditure growth.”
To obtain information on the report, contact Douglas-Westwood at www.dw-1.com
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