By OGJ editors
HOUSTON, Mar. 28 -- The work-class remotely operated underwater vehicle (ROV) industry has had strong growth as a result of recent sustained high oil prices. Particularly since 2002, expenditure on work-class ROV operations has more than doubled, and further strong growth is expected over the next 5 years, said Douglas-Westwood Ltd. analysts in a recent report.
Total expenditures for the ROV market is forecast to reach $1.46 billion/year by 2011, according to the report entitled "The World ROV Report 2007-11," which is based on analysis of demand drivers.
"Offshore utilization and ROV dayrates have increased dramatically over the past 5 years and stand at an all-time high," said lead analyst Rod Westwood. "Between 2002 and 2006 alone, the work-class dayrate increase was around 30%," he said.
In 2006, Westwood estimates, $827 million was spent on the operation of work-class ROV units worldwide, an increase of 86% on the 2002 value. This is forecast to increase by a further 76% to a 2011 value of about $1.46 billion—more than three times the market over the 10-year period, he said.
The study suggests that North America and Western Europe are expected to account for the largest proportion of ROV activity. About half of the total ROV units expected to operate in 2007 are associated with these regions, the report said.
High oil prices have resulted in high levels of drilling activity and increased installations of subsea wells, pipelines, control cables, and other hardware. Increasing underwater resources, therefore, are required to service the growing numbers of underwater installations, progressively more in deep waters beyond the economic reach of manned intervention.
This all manifests itself in the building of new drilling rigs and offshore construction vessels, all of which use ROVs in subsea operations, Westwood said.
The report contends that by the end of the period, more than 120 work-class ROVs/year will need to be built to meet demands of market growth and attrition of the existing fleet.
"Based on an average cost per unit" the study predicts that "work-class ROV capex will increase from its 2006 level of $186 million to $247 million by 2011&151;an increase of 33% over the period." Cumulative expenditures, meanwhile, are expected to be slightly higher than $1 billion over the forecast period.