Strong growth seen in offshore oil prodution

Worldwide offshore oil production is expected to rise by about 17% to 1.23 billion metric tons (24.6 million b/d) in 2000. The increase to that level averages 4.4%/year during 1998-2000, which is double the growth projected for the oil industry as a whole. The forecast (see Table 1 [63,893 bytes] , p. 25), compiled in a report by Mackay Consultants Ltd., Inverness, Scotland, takes into account recent decreases in oil prices and economic problems of many countries in Asia. Offshore gas

Nov. 30, 1998

2 min read

Worldwide offshore oil production is expected to rise by about 17% to 1.23 billion metric tons (24.6 million b/d) in 2000.

The increase to that level averages 4.4%/year during 1998-2000, which is double the growth projected for the oil industry as a whole.

The forecast (see Table 1 [63,893 bytes], p. 25), compiled in a report by Mackay Consultants Ltd., Inverness, Scotland, takes into account recent decreases in oil prices and economic problems of many countries in Asia.

Offshore gas production is expected to grow at an even faster rate, Mackay said (see Table 2 [63,140 bytes], p. 25). It envisions gas production of 658 billion cu m (65.7 bcfd) in 2000, a 27% increase in the 3-year period, or an average of 6.7%/ year. Much of the gas production growth will come from new producing areas in Africa and the Asia-Pacific region, Mackay said.

An indicator

Mackay says one of its best indicators of offshore activity is total offshore expenditures (see Table 3 [68,504 bytes], p. 25).

Offshore outlays are forecast to increase by 9% to a little more than $94 billion in 2000, or about 2.3%/year.

This growth rate, Mackay pointed out, is well below the forecast for offshore oil and gas production and well below the sector's average growth in spending, which has been about 4.5%/ year this decade.

Mackay is particularly concerned about development projects in the current financial climate. Its report assumes major projects such as Natuna gas field off Indonesia and Clair oil field north of Scotland will be delayed for the foreseeable future. Thus, its development expenditure forecasts have been lowered to the current mark.

Offshore exploration activity and spending are also forecast to fall significantly during the next few years. The number of offshore exploration and appraisal wells is predicted to decline by 12% to 730 in 2000 and exploration expenditures to decrease 14% to $6.5 billion, Mackay said.

Regionally, Mackay expects significant changes during the next few years. Activity and expenditures in the North Sea are forecast to decline, mainly tied to a fall in U.K. oil production. It projects the fastest growth areas to be Asia-Pacific, despite the wider economic problems there, and Africa.