Global subsea spending up

March 12, 2007
A presentation on future subsea oil and gas field development trends, challenges, and technology requirements was featured at PennWell’s Subsea Tiebacks Forum held last month in Galveston, Tex.

A presentation on future subsea oil and gas field development trends, challenges, and technology requirements was featured at PennWell’s Subsea Tiebacks Forum held last month in Galveston, Tex. The talk was presented live as well as over the internet as a webcast, which was archived for future access on

One of the speakers, Howard Wright, senior analyst with Infield Systems Ltd., presented the London-based firm’s forecast of worldwide subsea oil and gas development spending.

Infield expects subsea spending over the next 5 years to total $86 billion. This will include $10.6 billion on subsea equipment, $31.5 billion on pipelines and control lines, and $44.2 billion on drilling and completions.

The biggest growth area will be West Africa, making up 24% of the total spend. Other key areas are the US Gulf of Mexico, Brazil, and the northwest European continental shelf.

Also over the 5-year period, the forecast calls for increased subsea activity to boost spending to $4.9 billion from $1.3 billion in Australasia and to $5 billion from $1 billion in Southeast Asia.

Key trends

Wright defines deepwater developments as those in more than 500 m of water.

These developments have gone from being the technological frontier to being strategically vital to operators, such that even national oil companies are moving into deeper offshore areas outside their domestic markets.

The three primary arenas for deepwater developments through 2006 were the Gulf of Mexico, Africa, and Latin America, and Infield expects these areas to maintain the current level of offshore activity.

But activity in the Asia-Pacific will also ramp up, providing the impetus to the forecast growth. Still under-explored are the deep and ultradeep waters of the Gulf of Guinea, the deepwater South China Sea, the Indian Ocean margins, the Arctic, and the ultradeepwater Gulf of Mexico.

Activity in the short term will remain little changed geographically, though. The analysts call for 37% of all deepwater field activity to remain off North America, 32% off Brazil, and 27% off Africa.

Forecast to 2012

Infield forecasts that the number of subsea wells brought on stream will reach 500/year by 2011, with floating production in West Africa, Brazil, the Gulf of Mexico, and Asia driving the growth.

Currently there are subsea production facilities in the waters of 47 countries, and Infield see this number expanding by 12 through the forecast period.

Water depths will increase, too. The share of offshore wells completed in water depths greater than 500 m will grow to 67% in 2012 from 55% this year, Wright said, with the deepest completions expected at about 3,000 m.

In the ultradeepwater frontier, the number of subsea wells forecast to come on stream will grow to over 100 in 2012 from about 20 in 2002.

When asked whether high rig rates are driving project architecture towards more dry-tree solutions over subsea developments, Wright said the leading developments are still employing subsea systems. In developing heavy oil in Latin America, dry-tree completions possibly will become a trend, though, he said.

Looking back

Surprising the analysts was a look back at one difference between their 2002 forecast and the actual split in the types of companies that recently have drilled deepwater subsea wells.

In the 5-year forecast that it formulated in 2002, Infield predicted that through 2007 fully integrated operating companies would account for 68% of deepwater wells brought on stream in the Gulf of Mexico, leaving just 29% drilled by independent operators and 3% by other companies.

The actual share of wells drilled in the deep waters of the Gulf of Mexico by integrated companies during the 5-year span was just 44%, while independent operators were responsible for 52% of all wells brought on stream in the same area. Wright said this shows that, more than expected, the independents have been able to overcome some of the major challenges of deepwater developments.

Those challenges that remain for companies involved in offshore development include limited equipment availability and limited manpower, which raise costs and threaten the momentum of development activity levels.

But with higher demand and prices for oil and gas, Infield has seen companies shift from taking a low-cost development approach to one of doing what it takes and paying what it takes to get the job done.