Global oil's faithful servant
So fundamental has the North Sea industry's contribution been to Europe's oil and gas supply-and economies-over the last 30 years, that one can become blinkered to the broader significance of hydrocarbons being produced in the waters off more than 130 countries worldwide.
So fundamental has the North Sea industry's contribution been to Europe's oil and gas supply-and economies-over the last 30 years, that one can become blinkered to the broader significance of hydrocarbons being produced in the waters off more than 130 countries worldwide. The latest Prospects report from Mackay Consultants Ltd., Inverness, Scotland, for 2000-04, serves as a useful aide m
Even to pick out a few figures from the vast swathes of data published in this 185-page study offers the beginnings of a picture of offshore's ever-more dominant role in the global oil and gas business. Worldwide oil production has risen nearly 12% since 1989; the offshore input to this volume has swollen 62% over the same period.
To put a finer point on it, offshore output now makes up 33% of world oil flow and more than 25% of that of gas, percentages forecast to only increase over the next 5 years. As Mackay acknowledges, in its previous Prospects study (for 1998-2000), these forecast shares were put at 30% and 22%, respectively. So the trend is clear.
Offshore continues to justify the corporate and governmental attention paid it, too, to go by Mackay calculations. Offshore production is projected to climb by an average annual rate of 4%, twice that of the industry in toto, while gas output is seen increasing 5.8% each year, also a doubling of the overall industry figure.
This escalating growth rate is explained, it will come as no surprise, by expanding commercial gas markets in the Asia-Pacific region and Africa and by the anticipated consumer shift from oil to gas.
If the demand side of the equation is plain, supply remains less so. Coupled with the collapse of the oil price in 1998, this uncertainty led to a drop in yearly capital expenditure offshore-to $9.3 billion pro forma this year from $10.4 billion in 1998. However, as investment plans from most any major suggest, spending programs are on the rebound. Mackay foresees offshore capital expenditures rising steadily to a new peak of $11.3 billion in 2004.
West Africa and the US Gulf of Mexico are seen leading the way in boosting output to offset current supply woes and the Organization of Petroleum Exporting Countries' disproportionate influence on oil prices to 2004.
From which one comes full circle to the North Sea. Currently the largest offshore producer-27% of total worldwide oil output-the North Sea is expected to see its highest level of investment over the next 4 years as operators develop hundreds of marginal fields and extend the life of those in production.
As a recent polling of 32 UK offshore operators confirmed, "investment intentions" for next year stand at some £4 billion-£1 billion more than plans for 2000 and before factoring in exploration budgets. The optimists among North Sea luminaries are even suggesting the start of the province's production decline might be pushed by from 2001 to 2003 by such an outlay.