By OGJ editors
HOUSTON, May 1 -- Total worldwide offshore oil and gas spending is expected to total $247.5 billion in 2010 compared with $192.9 billion expected in 2006, international UK research firm Douglas-Westwood Ltd. said in a study.
Speaking May 1 during the Offshore Technology Conference in Houston, Douglas-Westwood Managing Director John Westwood said, "The real star of the show will be the. . .operational sector."
Douglas-Westwood forecasts operational expenditures of $127 billion/year in 2010 compared with $83 billion in 2006. Capital expenditures are expected to reach $120 billion/year in 2010 from $110 billion/year in 2006.
Offshore oil and gas production is forecast to reach 53 million boe/d in 2010 from 43 million boe/d in 2006, said the study, "The World Offshore Oil and Gas Production & Spend Forecast."
Researchers expect that higher oil and gas prices are here to stay, saying that only a world-scale economic or political crisis capable of interrupting demand growth could trigger an oil price collapse.
The offshore exploration and production industry is expected to become increasingly vulnerable to outside economic and political circumstances beyond 2010, the study said.
The anticipated surge in world offshore investment will vary from region to region, said Michael R. Smith, director of Energyfiles, a Douglas-Westwood research partner.
Smith noted increasing shortages of lower-cost prospects everywhere but in the Persian Gulf, and he also sees limited availability of potential deepwater areas outside of the existing areas such as Brazil, the Gulf of Mexico, and West Africa.
"Nevertheless, all markets will retain ever-higher levels of operating expenditure," Smith said. "Overall, we expect West Africa to show the greatest growth."
Existing and start-up small oil companies increasingly will dominate new activity in mature offshore regions, the study concluded, adding such companies will specialize in marginal field developments and production.
Except for assets already held by a few national oil companies operating in the Persian Gulf, low-cost oil plays virtually have disappeared, Smith said. By 2010, new large-scale opportunities are expected to be found only in ultradeep water and in arctic regions.
"Conversely, offshore gas still has opportunities related to the advent of new gas production and conversion technologies, the growth of gas markets in the developing world, and pressures by all governments to eradicate gas flaring," Smith said.
LNG projects and the beginning of a gas-to-liquids industry "are kick-starting the development of stranded gas fields that have been lying fallow for many years and are encouraging new exploration drilling in gas-prone areas," Smith said.
The study forecasts growth in all types of deepwater production facilities, but especially in floating production systems as well as in subsea production and processing hardware. Subsea systems also are expected to attract an increasingly larger portion of the shallow water expenditures in coming years with an anticipated acceleration of marginal development programs.