Offshore drilling spends still surge ahead
The latest edition of the ‘World Offshore Drilling Spend Forecast 2008-2012’ published today by Douglas-Westwood and Energyfiles forecasts that by 2012 the global drilling market will be worth an estimated $80 billion, more than doubling since 2003.
The data derived from the ‘Energyfiles Global Database’ shows that nearly 18,000 offshore wells were drilled over the last five years. “The forecast for the next five years is generally stable but with a peak in 2010 and a slight dip in 2011, ultimately equalling a little over 20,000 for the period, and representing a rise of 13%. Asia is now seeing the highest activity, followed by North America and then Western Europe. These areas are expected to continue to see higher drilling levels although average numbers will decline significantly offshore Western Europe,” said report author Dr Michael R. Smith of Energyfiles.
Steve Robertson of Douglas-Westwood commented, “with oil prices more than quadrupling over the past five years drilling rig utilisation has reached close to 100% and maximum day rates have soared from $225,000 to more than $520,000, with a future contract agreed at $637,000 for a latest generation deepwater rig.”
The real growth story in the report continues to be the move into deep waters. It is estimated that in 2007 nearly $50bn was spent on shallow water drilling compared to $18bn in deep waters. By 2012 deepwater expenditure is expected to have increased by more than 40% whilst shallow water drilling will have risen by just 6%.
Dr Smith commented, “Despite today’s political environment there are still lots of offshore opportunities. Even within OPEC, activity is now increasing. Nigeria, Indonesia and Angola, the three OPEC countries with deep water potential, are promoting outside investment into their deep water basins. And countries around the Persian Gulf are drilling many more shallow water wells, as well as encouraging foreign companies to develop their huge gas reserves.
“In the future shallow water development spending will be generally flat although will show modest gains after 2010. However, some areas are seeing increases, especially in projects underway in the Persian Gulf to increase production capacity. Also in Russia and Azerbaijan, where unexploited areas are being developed in massive, long-term schemes. But deep water development drilling is increasing rapidly in all regions where fields have been discovered, supported by the many ultra-deep water projects now proceeding, especially in West Africa, Brazil and the Gulf of Mexico.
Though rigs have increased their relative share of drilling spend the money is not just being spent there. In 2007 it is estimated that 37% of expenditure was billed by the rig contractors, just over a fifth was earmarked for support, 6% went towards geoscience and the remainder went towards well engineering. “But as the industry probes more complex geology, spending on anything related to longer and more tortuous well paths is expected to grow disproportionately to other technologies,” says Dr Smith.
