Deepwater field development expenditure is forecast to continue its strong growth trend, doubling over the next five years. Launching the latest edition of 'The World Deepwater Report' at the 14th Deep Offshore Technology Conference
in New Orleans, John Westwood
, managing director of international analysts Douglas-Westwood, said that his firm expected nearly $58 billion to be spent over the next five years in developing deepwater fields. "We expect West Africa to lead the pack attracting 38% of the expenditure, followed by the Gulf of Mexico with 32% and Brazil with 23%," said Westwood.
The report is based on analysis of data in the Infield Systems database and their data manager, Dr. Roger Knight, stated that the underlying data shows that oil & gas companies are currently considering over 140 deepwater field developments over the period. "Some are tiny single well tiebacks and of course not all will go ahead," said Knight, "so the analysis takes a conservative view of the prospects. Nevertheless, the outcome is that we expect at least 32 billion barrels of oil equivalent deepwater reserves to come onstream compared with the 10 billion boe brought onstream over the previous five years."
Douglas-Westwood's lead analyst, Dominic Harbinson, said, "Over the next five years some $21 billion is likely to be spent on deepwater floating production systems, $18 billion on drilling and completing subsea wells and $11 billion on flowlines and control lines, while subsea hardware and surface completed wells could account for a further $8 billion."
So what could derail these oil company plans? John Westwood's main concerns are limited human resources and contractors' low profitability. "Although everyone in the industry is aware of the problems of an aging workforce and low levels of graduate attraction, in reality far more still needs to be done to address the problem, perhaps by finding cleverer ways of using the huge potential skill pools of the developing world. "The second point is that risk and reward for the contractor community has got out of balance. It is now obvious that the present EPIC contracting system has pushed too much risk onto contractors and new working methods must be developed. Lump-sum contracts are fine for commodity products; I don't think they are appropriate for the leading edge of such a demanding industry. In the final analysis, the deepwater oil & gas industry is dependent upon the existence of profitable contractors."
The World Deepwater Report 2003-2007 is available from Douglas-Westwood Limited
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