Infield Systems examines forecast demand changes within the ROV market using supporting data from its InfieldROV market intelligence tool and ROV databases. ROV demand within the oil and gas industry is driven by two distinct markets, there is the rig based market where ROVs perform observation duties and assist in work on BOPs, managing cuttings and other seafloor based work. The second market is the marine construction, vessel based market with work focusing on installation, IRM and decommissioning. This tends to be driven by expected offshore Capex and Opex levels. Variations in this market are caused by changes in the distribution of spend by operators depending on the Life of Field phase of a development.
Despite the stability of the ROV market as a whole, growth rates across regions and market segments are expected to vary a great deal during the forecast. The major narrative emerging from the trends in the market is higher growth in the marine construction market compared to the drilling market. The drilling market is largely constrained by the limits of rig numbers. The 11% forecast growth in the number of mobile drilling rigs to 2019 means there are limits on how much ROV demand can expand without a historically abnormal change in rig utilisation rates. Rig demand will form 73% of ROV demand in 2019, a slight fall as a proportion of overall demand from 75% of the 2015 market. The dominance of the rig sector in influencing ROV market demand and the low growth prospects from this sector leads Infield Systems to project a low compound annual growth rate (CAGR) of just 3% globally for ROV demand. The smaller marine construction market is anticipated to expand by 5% CAGR, with installation work growing by 11% and decommissioning by 9%. The marine construction market has good scope to grow for a variety of reasons. Basin maturation in the industry combined with a need to replace reserves drives companies to develop more complex fields, deeper water fields or both. Also driving demand is the significant amount of offshore infrastructure reaching the end of its operational life, therefore requiring more IRM work as well as there being potential for decommissioning projects to get underway in the more mature basins. These factors could all help drive future growth for the marine construction market for ROVs.
Both the offshore drilling and marine construction markets depend heavily on ROVs for a whole range of activities. Infield Systems expects ROV usage to increase during the forecast to 2019, a consequence of poor reserve replacement prospects in shallow waters and sustained high oil prices enabling operators to work in deeper waters in search of reserves. ROVs already undertake a wide variety of work in the offshore industry and can work in competition or collaboration with divers. Divers have an edge in zero visibility conditions where ROV cameras become useless, however, the advent of truly high resolution sonar and other advanced subsea navigation equipment could begin to negate this advantage to divers even in turbulent seabed conditions. Autonomous Underwater Vehicles (AUVs) are already proving to be highly beneficial to the industry, particularly during the exploration phase of field development, whilst technological developments around autonomous pipe inspection could help expand the AUV market. Heavy work class ROVs will remain popular for the construction and decommissioning phases of life of field, yet there could be increasing opportunities from the production phase. Currently, light work class ROVs tend to be deployed on platforms, these are cheaper than heavy work class systems, but reduce the ability of operators to respond to unforeseen circumstances.
High rig day rates have caused the reliability of ROVs to become a critical factor in recent years, with new ROVs reaching the market that are focussed on reducing downtime. This will be a major benefit to the industry in the future, as a rig can command a dayrate a hundred times larger than an ROV, yet can be left idle for want of a working ROV. New ROVs require a large initial investment however, and with ROV day rates in the rigs market tending to be comparatively low, it is unclear whether these new systems will be cost effective to bring to the wider rig market.
Despite wide variations in regional growth rates, the forecast for WROV demand by region sees little fluctuation over the forecast. The high levels of inertia in the market stem from the fact that rig demand makes up the vast majority of the global ROV market, the use of rigs varies relatively little year by year on a regional scale and so proportional demand for ROVs sees little variation as a consequence.
Infield Systems forecasts Europe to retain the largest share of demand. Development and exploration drilling continues to fuel European ROV demand days; yet drilling demand growth will be relatively flat during the period to 2019. A lack of recent exploration work on the UK continental shelf compared to previous years and recent changes to the tax regime in the UK have depressed activity. Decommissioning in the region is expected to see a CAGR of 85%, and coupled with installation of subsea completions and control lines could drive any relative growth in European demand.
According to Infield Systems’ ROV Tracker market intelligence tool, Asian ROV demand will remain the second largest globally. The South China Sea is the core market in the region and despite the shallow waters, ROV demand is expected to grow by almost 4%CAGR. Well demand growth in the region will remain lower than the global average as the maturing basins of Southeast Asia require lower levels of drilling. Marine construction work in the region is expected to grow by 8.2%CAGR during the five years to 2019, driven by a rapid expansion in subsea completions demand; whilst pipeline installations also make up a large proportion of demand growth.
Despite starting from a low base, the Australasian requirement for ROVs is expected to grow by 3% CAGR during the forecast, potentially driven by higher demand for IRM services on pipelines and subsea completions in the Australasian market following the recent and short term forecast boom in installations in the region. However, Australasian WROV demand for installations is predicted to fall over the forecast, following a peak in demand in 2014, a result of high levels of pipeline and control line demand for the Ichthys development.
Most other regions are forecast to attract respectable growth in ROV demand of 4-5% CAGR, with the exception of North America which is expected to see growth of just 1%. This can be largely attributed to lacklustre well demand growth of just over 1%, combined with a forecast fall in every marine construction work type except decommissioning. In North America, decommissioning is expected to grow by 7.5% CAGR whilst the overall marine construction market will contract slightly. The fall in marine construction work can be explained by a fall in all types of platform demand, bar installation. Platform work by ROVs will fall, a consequence of lower forecast decommissioning levels whilst current platform removals impact on future IRM work; pipeline work meanwhile will increase as a result of high levels of demand from deep and ultra-deepwater and rising levels of decommissioning demand.
Platform ROV days will fall as a proportion of overall demand, as a result of higher growth levels within the subsea completions, pipelines and control lines sectors. Single point moorings will continue to make up relatively small proportions of the overall market. Platform demand is expected to see a slight fall over the forecast of just 1% CAGR, but it is the rapid rise in other markets which contributes to the steep fall in the proportion of ROV days. The pipeline and subsea completions markets are expected to expand by 8% and 11% CAGR respectively during the period to 2019, with strong growth across the majority of regions. The increasing use of subsea completions is driven by recent increases in the utilisation of subsea infrastructure over surface wells.
Subsea equipment is increasingly used to target reservoirs over a wider area with those fields then tied back to platforms, resulting in fewer platform installations per field development. These tend to be used particularly in deeper waters and mature basins where the profitability of developments can be improved without the need for new platforms. Deepwater developments also favour subsea equipment with FPSOs, the most common floating platform unsuitable for dry trees. The increased use of subsea equipment leads to increases in ROV demand from both the installations and IRM markets, whilst decommissioning of subsea equipment is expected to grow by 32% CAGR, the fastest forecast growth of any work type by object. Africa and Europe will drive this rapid growth in subsea decommissioning, with potentially high demand driven by just a handful of fields, with scores of trees likely to be removed in one year. The Ceiba field in Equatorial Guinea for instance, is probably largely behind the strong levels of demand for subsea completion decommissioning in 2019.
InfieldDecom - Infield Systems’ decommissioning market intelligence tool suggests that pipeline demand could also be driven by potential decommissioning increases, with Europe, North America and Africa likely to lead this demand growth. Installation demand is forecast to grow by 64% CAGR in the Middle East with international export lines particularly in future Caspian Sea connections, pushing demand for pipeline installations higher.
The growth forecast for the ROV market is a result of the niche that ROVs have carved out for themselves. This is true in both the drill support activity and marine construction markets. Without advances in ROV technology, many of the currently producing deepwater developments would not have been possible. Despite the incredible advances that have been made in ROV technology, their already wide ranging repertoire in the industry will only expand as subsea developments become more complex.