DRILLING

Report: 5-year offshore drilling spend to reach US$189 billion

The second edition of World Offshore Drilling Report published by Douglas-Westwood has predicted ...

Report: 5-year offshore drilling spend to reach US$189 billion

According to the author of the report, EnergyFiles Ltd’s Dr Michael R. Smith, “Of these wells nearly 4,500 will be exploratory costing US$75 billion, and around 10,500 will be development, costing US$114 billion.”

“It is estimated that drilling and completion expenditure in 2003 [alone] was US$36 billion [and] spending levels are expected to grow somewhat over the next two years and then decline slightly, stabilising at about US$37 billion per year,” added Dr Smith.

Dr Smith sees a shift from the long-declining shallow water drilling. Even Africa and Latin America saw deepwater drilling expenditure exceed shallow water drilling expenditure for the first time last year. Only the Middle East had no deepwater activity.

“On average around 3,000 to 3,200 offshore wells are drilled each year of which 12% are now in deepwaters. These are expected to increase to around 17% of all wells drilled in 2008, with US$56 billion forecast to be spent globally on drilling and completing deepwater wells over the next five years. This is an increase from US$37 billion in the previous 5-year period,” said Dr Smith.

This shift to more deepwater drilling, according to Dr Smith, will have a knock-on effect on the fabricator market in both a positive and negative light.

“The deep and ultra-deepwater rig market is expected to remain at high utilisation rates, especially for drillships and fifth generation semisubmersible rigs water depth rated greater than above 1,500 metres. Demand for high specification jack-ups is likely to remain strong as new gas projects are identified. Consequently, most new expenditure on drilling rigs is expected to be directed at upgrades of both jackups and floating rigs to allow faster drilling and deeper water and/or deeper reservoir drilling,” said Dr Smith.

“The shallow water semisubmersible market will be generally weaker, but decline in the Gulf of Mexico and the North Sea will be counter-balanced by a pick-up in demand in West Africa, India and China, at least over the first two years of the five-year period,” added the author.

Dr Smith, however, warned there would be constraints in the deepwater sector and growth in the sector would not mirror the rises seen in the 90s.

“Over the next five years drilling levels will become opportunity-constrained and a slight decline is forecast of around 8%. Numbers of wells drilled and expenditures may not increase dramatically even if there is real oil price growth. Furthermore, better development wells mean fewer will be needed per field,” said Dr Smith.

“It is expected that steady, rather than dramatic improvements, to drilling equipment and services will occur over the next five years. These will facilitate wells to be drilled in more extreme situations, in greater water depths and reservoir depths, at higher temperatures and pressures and in areas prone to greater hazards,” added Dr Smith.

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A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

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