Achieving Deepwater Success

Abstract

Guest editorial Despite some uncertainty in the global economy, the long-term outlook for energy demand remains strong and the industry will continue to be challenged to meet hydrocarbon supply over the next decade. In its latest outlook, the International Energy Agency estimates that approximately 32% of oil production needed by the end of this decade has yet to be discovered or developed, and by 2035 it will be closer to 50%. In response to this challenge, the exploration and production (E&P) industry has become more ambitious in searching out new frontiers, with some notable successes over the past few years, particularly in deep water. More than half of all oil and gas reserves discovered worldwide over the past 10 years have been offshore and the majority of large finds have been in water depths of more than 500 m (1,640 ft). We are reminded that 10 years ago pre-salt reserves offshore Brazil were still not proven, and that deepwater discoveries in areas such as French Guiana, Tanzania, and Ghana were not even on our industry’s radar screens. It is estimated that approximately 200 new deepwater fields will enter production over the next 4 years. By 2020, production from deepwater fields will represent about one-third of total offshore production, representing about 10% of total global oil supply. Deepwater well capex is expected to grow from USD 47 billion to approximately USD 128 billion by 2020, with 71% of this growth taking place in the Atlantic basin—particularly in Brazil, Angola, Nigeria, the US Gulf of Mexico (GOM), and Nor-way. Other countries with solid deepwater activity include Australia, Egypt, and India. To achieve this significant growth, an increase in the number of floater rigs is forecast, from 200 in 2008 to more than 400 by 2020—an average of more than 20 new rigs per year. This estimate is consistent with mid-term forecasts of new deepwater rigs and suggests that the trend will be maintained until the end of the decade. Over the period 2013-2020, deepwater well costs are expected to slightly increase in real terms. While efficiency gains are expected in regions such as the US GOM, thanks to next-generation rigs entering the market and the continued integration trend of new drilling technologies, these will be offset by increasingly complex and deeper wells. Exploration and appraisal activity is set to continue along the same trends for the rest of this decade, with further expansion in basins with recent discoveries such as the Mexican GOM, Equatorial Atlantic, east Africa, and the eastern Mediterranean. Activity will also be strong in basins with less-recent discoveries but where technology and/or access drivers have opened additional opportunities, such as Brazil, west Africa, and the US GOM.