FOR IMMEDIATE RELEASE
Houston , 2 May 2006
Offshore Technology Conference, Booth 2459

Deepwater still has a long way to go

Source: Global Perspectives Floating Production Market Update To 2010

“In relative terms the deep and ultra-deepwater regions are still under-explored and hold considerable potential say Howard Wright, Senior Analyst and Dr Roger Knight, Data Manager at Infield Systems Limited.

The past ten years has seen the deepwater (≥500m WD) offshore arena evolve from a frontier area to an intrinsic and strategically important element for most global offshore operators’ asset portfolios. A cursory glance at the websites and annual reports of these operators will show the prominence that deepwater now commands and underline the value of its success. But, in relative terms the deep and ultra-deepwater regions are still under-explored and hold considerable potential.

Infield Systems’ new third edition of the Global Perspectives: Deep and Ultra-deepwater report to 2010 reports that global deepwater expenditure is forecast to continue its growth trend of the past five years, resulting in an increase in total expenditure to over $71bn - a 91% growth over the preceding five-year period. This expenditure relates to platforms, subsea, control lines, pipelines and risers and is shown in the actual year of spend.

There are many projects such as Dalia, Bonga, Kizomba, completed or due to be completed in the near future and beyond these, there are developments such as Kizomba C and Block 18 Angola to name just a couple. Africa as a whole is forecast to account for 40% of all deepwater expenditure over the 2006-2010 period.

In Latin America Petrobras is still the major player and has remained aggressive in developing its deepwater prospects. Towards the end of the decade Chevron with it’s Frade development and Shell with it’s BC-10 project look set to be the next foreign operators to develop in this deepwater region. In total projects in Latin America look set to account for 25% of all future deepwater expenditure.

The third area of deepwater activity in the Atlantic Margin is the Gulf of Mexico. Having had several major deepwater prospects recently developed there seem to be less on the horizon. Projects such as Blind Faith, Tahiti, Knotty Head and the Great White area show that there are opportunities, but it looks likely that a lot of the activity in the Gulf of Mexico in future years is likely to revolve increasingly around subsea tie back developments to existing hub facilities.

Beyond the Atlantic Margin there are pockets of new deepwater plays. In Asia there are developments forecast off the coast of East India, offshore Sabah Malaysia and Off the East coast of Kalimantan. Other areas of new prospectivity include Australia with tie back to shore projects such as Exxon’s Janz at 1300m.

Despite this level of new developments there are potential issues that face the industry if the current feel good factor is to be maintained. The major issues centre on bottlenecks to supply which are already becoming apparent. Such issues are having an impact on scheduling and cost and although the contracting community has added deepwater capability to take advantage of the growth in deepwater, it still seems likely that the industry is going to reach certain choke points - particularly regarding deepwater pipelay and heavylift. This is likely to have cost implications in terms of day rates and mobilization and demobilization costs, but also it could have a significant impact on scheduling and cause delay to on-stream dates.

Whilst operators are no doubt going to continue to seek new elephant discoveries, the reality of deepwater is that it is no longer the frontier zone that it was five to ten years ago. With fewer new prospects on the longer term horizon, particularly in North America it looks like there is a two pronged approach being taken by operators in the deepwater arena. Whilst new hub developments are always likely to be sought, operators look set to concentrate on maintaining production profiles by bringing tie-back fields on-stream as ullage allows. Infield System’s view is that the number of new facilities expected to come on-stream is likely to fall back from the current high levels, but will be replaced by an increase in the market of subsea.

- ends-

(notes to the editor)

Infield Systems Limited is a privately owned independent limited company providing database, publications and analytical services to the offshore oil and gas industry.

The Infield Worldwide Offshore Energy Database provides global data on over 7,600 operational and future developments, detailing platforms, floating production systems, subsea developments, pipelines, umbilicals, spm's, operators, field ownership, terminals, LNG and GTL facilities.

The Infield OFFPEX™ Market Modelling & Forecasting System is a highly developed proprietary system that includes macro-economic, techno-economic and business processes in the production of key industry statistics. The OFFPEX system incorporates Infield’s global Offshore Energy Database to produce detailed financial and business models, including capital expenditure and supply/demand assessments. Fully scalable and adaptable, from individual elements through to national, regional, global or company forecasts and scenarios with timelines from 1908 to 2092, outputs from the OFFPEX™ Market Modelling & Forecasting System are used by key operators, offshore contractors & suppliers and the financial community.

Infield’s service capabilities include; customised databases; executive market forecast reports covering the deepwater, floating production, fixed platform, subsea, pipelines and umbilical sectors; market analysis and benchmarking, competitor analysis, scenario development and planning, tailored research, market due diligence, energy databases, business strategy, quantitative and qualitative surveys.

Contact :
Quentin D’A Whitfield
Director
T: +44 (0)20 7426 9661
E: quentin@infield.com

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