Westwood sees jump in deepwater investment
Operators will make capital investments in deepwater exploration and production of nearly $25 billion/year by 2012, says John Westwood, managing director of the UK consultancy Douglas-Westwood Ltd.
By OGJ editors
HOUSTON, Jan. 10 -- Operators will make capital investments in deepwater exploration and production of nearly $25 billion/year by 2012, says John Westwood, managing director of the UK consultancy Douglas-Westwood Ltd.
Deep water, Westwood told the Society of Underwater Technology in Houston, represents "virtually the only place where giant oil fields will be found in future years."
Major international oil companies, he stressed, need that kind of discovery.
"There are literally hundreds of small, undeveloped offshore fields worldwide, but 'big oil' needs big fields," Westwood said. "The remaining 'easy oil' and indeed gas is in hard places and is being strongly competed for by countries such as China, India, and Russia. A recent example is Gazprom's move to gain access to Nigerian gas reserves."
The 2008-12 growth his firm projects for deepwater E&P expenditure represents growth over the prior 5 years of 30%. It will "drive demand for deepwater drilling rigs, floating production systems, subsea production hardware, and more," Westwood said.
Major companies increasingly turn to deepwater operations as production declines in continental shelf areas such as the North Sea and Gulf of Mexico and as access shrinks to opportunities elsewhere.
Westwood noted that national oil companies control 80% of global oil reserves, the same share international oil companies controlled in the 1970s.
At the same time, international companies face rapidly rising costs.
For example, Westwood said, lifting costs in the UK North Sea increased from $15/bbl in 2005 to $25/bbl.
Westwood cited the Arctic as another potentially rich but difficult producing area, where Russia, Canada, and the US are competing in "a great subsea land claim."