Offshore in depth

Over the next several years, the North American offshore market should see expenditures increase 51%, compared to the previous five-year period, according to a recent forecast by energy analysts at Infield Systems. Historically, North America has been dominated by U.S. Gulf of Mexico (GOM) developments, and this trend will continue, with the GOM accounting for 90% of regional capital expenditures.

As shallow-water reserves decline, operators have expanded their exploration efforts into ever-deeper waters, with Capex forecast to increase 86% for projects in water depths greater than 1,000 m, Infield says. Key deep- and ultra-deepwater developments expected to feature significantly over the period through 2017 include:

• Anadarko’s Heidelberg and Lucius developments
• Shell’s Stones and Appomattox ultra-deepwater developments
• Exxon Mobil’s Hadrian North project, although some uncertainty surrounds it, and there may be some re-design.

During the forecast period to 2017, Infield expects Canada to increase Capex spending. Seen as a new frontier for development, the Arctic region has been attracting increasing operator and media interest. However, significant challenges exist for operators wanting to work in these highly protected waters, with environmental opposition remaining strong.

Among operators, Shell is expected to account for the highest Capex during the forecast, directing 97% of its offshore expenditures toward GOM developments. Here, the operator is expected to develop its second-most capital-intensive development globally after West Africa’s Bonga Southwest, with the Stones and Appomattox projects accounting for a significant share of Shell’s spending through 2017. The largest proportion, 44%, of the cost will be directed toward a newbuild semisubmersible. The forecast, Offshore North America Oil & Gas Market Report, can be accessed from the Infield Systems website.

Key operators. Other important operators include Anadarko and Exxon Mobil—79% of Anadarko’s Capex will be required by field developments in water depths greater than 1,499 m. The greatest depths will be seen on the Lloyd Ridge Cheyenne East prospect, where subsea expenditure is expected through 2014. The most capital-intensive project for the U.S. independent after Lucius is finished is expected to be Heidelberg, with its subsea element and spar installation.

Exxon Mobil is forecast to direct Capex to both U.S. and Canadian assets, with recent project sanctions including the giant Julia tie-back within the GOM’s Walker Ridge area. Exxon Mobil remains undeterred by Shell’s Arctic hiatus, directing 5% of its projected expenditures toward Canadian Arctic assets. Chevron should see lower levels of offshore expenditure over the forecast, with Capex targeted at a smaller number of fields than previously. However, Chevron’s average expenditure per field development is forecast to increase.

Subsea completions are likely to see the highest investment over the forecast period, driven by deepwater GOM developments. With exploration in deeper waters increasing, subsea completion expenditures will inevitably rise. Offshore North America, satellite wells continue to dominate market Capex.

The pipeline market will continue to attract significant Capex, with the GOM accounting for around 82% of the market’s expenditures. SURF lines account for the largest proportion of the market, as a result of GOM deepwater activity, with a large number of subsea tie-ins to floating platforms required. In terms of trunk lines, the forecast increase in expenditures is due to the increasing number of installations expected offshore the U.S. and Canada.

Almost 75% of offshore platform expenditures will relate to floating facilities, mainly associated with GOM projects. Regarding fixed platforms, 80% of Capex is forecast to be directed toward fields in Canada, with one of the largest projects being Exxon Mobil’s Hebron platform offshore Newfoundland. Historically, the U.S. has dominated the fixed platform market, but as shallow-water development opportunities have declined, Canada is likely to overtake the GOM.

Helicopter services totaling $24 billion. Energy analysts at Douglas-Westwood, meanwhile, forecast $24 billion in expenditures for offshore helicopter services between 2014 and 2018, a 57% increase in comparison to the preceding five-year period. Western Europe will continue to account for the largest share of expenditures, driven by the extensive North Sea infrastructure and operators’ preference for large helicopters.

This is DW’s first edition of the World Offshore Oil & Gas Helicopters Market Forecast, which says that a major driver for growth in offshore helicopter services is the field development lifecycle. During drilling, helicopter requirements are short-term, requiring flexibility from the helicopter operator. During production, long-term crew transfer support is required. As production continues to ramp up, the drivers for a larger fleet of helicopters strengthen.

While Western Europe continues to underpin the overall market, DW expects faster growth rates in Africa, Asia, Australasia and Latin America. Globally, the medium-sized class accounts for close to 60% of total offshore helicopter service expenditures. Western Europe and Australasia are exceptions, as customers in these markets favor larger helicopters with increased range and carrying capacity.

The next five years will be important, as a new generation of medium-class helicopters, such as the EC175 and AW189, are introduced. DW notes that these models are highly efficient, with the most advanced safety systems, and are expected to perform well offshore.