Global Offshore Future of the North Sea - Subsea UK westwood.pdf · Future of the North Sea Marina...
Transcript of Global Offshore Future of the North Sea - Subsea UK westwood.pdf · Future of the North Sea Marina...
Subsea Integrity and Efficiency Conference - London
Douglas-Westwood Limited
Global Offshore Prospects and the
Future of the North Sea
Marina Ivanova, Research AnalystIva Brkic, Research Analyst
Subsea Integrity and EfficiencyConference
London1 December 2015
Douglas-Westwood: Spanning the Energy Industries
• Market leader in OFS market analysis and commercial due diligence • Two offerings: Research & Consulting• 25 years of commercial insight into the global energy industries• 1,100 projects for clients in more than 70 countries• Experience of some 250 niche energy segments• Over 20 industry awards• Global coverage with one of the largest sector-focused teams• Based in the Americas, Europe and Asia
“Top energy research group Douglas-Westwood”Financial Times
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Subsea Integrity and Efficiency Conference - London
Key Topics
• Macro Drivers and Oil Price• Offshore/Subsea markets• UKCS Outlook• Conclusion
Subsea Integrity and Efficiency Conference - London
Average Annual Spot Price Forecasts, 2010–2020Source: EIA, WB, IMF, IEA, RBC, Goldman Sachs, Platts, S&P, Citi, Soc Gen
Historical Brent and WTI Oil Prices, Jan-2010 – Oct-2015Source: EIA
Macro Drivers & Oil Price
Macro Overview - Background
Future Oil PriceHistoric Oil Price
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Brent WTI
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Subsea Integrity and Efficiency Conference - London
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Brea
keve
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il Pr
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in $
/bbl
2020 Crude Oil Production in Mbbl/d
● Rumaila
● US GoM Tiebacks
Onshore Middle East Offshore Shallow <250m Heavy Oil Offshore 250-1000m
Onshore Russia Onshore RoW Deepwater >1000m US Light Tight Oil
Oil Sands Average Breakeven Price
● Majnoon
● Tengiz expansion
Oil Supply Cost Curve for 2020Sources: Morgan Stanley, Credit Suisse, Douglas-Westwood
Oil Supply Cost Curve
Macro Drivers & Oil Price
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40 5354
55 5762
81
Average Breakeven Price
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Global Onshore Oil and Gas Wells Drilled by Region, 2010-2021Source: Douglas-Westwood World Drilling & Production Market Forecast
Global Offshore Oil and Gas Wells Drilled by Region, 2010-2021Source: Douglas-Westwood World Drilling & Production Market Forecast
Drilling & Production
Macro Drivers & Oil Price
Offshore WellsOnshore Wells
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Key Topics
• Macro Drivers and Oil Price• Offshore/Subsea markets• UKCS Outlook• Conclusion
Subsea Integrity and Efficiency Conference - London
Offshore Oilfield Services
Offshore & Subsea Markets
• Strong decline in Offshore OFS expenditure.
• Return to 2014 pricing levels for OFS unlikely.
• Pricing pressure weighing on OFS providers – a major contributor of decline, plus some volume reduction.
• Africa will remain robust driven by ultra-deep drilling activity.
Source: Douglas-Westwood
Offshore OFS Expenditure
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39%
14%8%
39%
53%
8%
11%
27% <250m
250-499m
500-999m
>1000m
Subsea Hardware (Trees Shown)
Offshore & Subsea Markets
• Record orders in 2013 led to strong installation activity in 2015.
• Offshore Brazil & Angola expected to be the main drivers of activity.
• Shallow water opportunities becoming limited; the development of deepwater reserves accelerates.
Source: Douglas-Westwood
Global Subsea Hardware Capex by Water Depth
2010 - 2014 2015 - 2020
Subsea Tree Installations Forecast
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1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
Num
ber
of T
rees
Aw
arde
d
GE Oil & GasFMCDril-QuipCameronAker Solutions12-Month Moving Avg
Subsea Hardware
Offshore & Subsea Markets
Source: Douglas-Westwood
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
Subs
ea B
ackl
og (
$bn)
GE Oil & GasFMCDril-QuipCameronAker Solutions12-Month Moving Avg
Source: Douglas-Westwood
Key Manufacturers Subsea Tree Orders Key Manufacturers Subsea Backlog
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Floating Production Systems
• Capex on new-builds, upgrades and conversions
• Expenditure allocated to the year FPS come on-stream
• Global orders severely impacted in 2015
• Global capex revised down
• Forecast capex expected to increase by 49%
• Key projects in 2017 (big in size):
1) Total’s Kaombo FPSO (Angola)
2) Total’s Egina FPSO (Nigeria)
3) Petrobras’s Lula Central (Brazil)
4) Inpex’s Ichthys (Australia)Source: Douglas-Westwood
Offshore & Subsea Markets
FPS Capex
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Decommissioning
• High oil price has extended the life of North Sea assets and delayed abandonment and decom. of fields
• Low oil price has accelerated decom consideration – is decom going to happen? (900 P&A wells and 248 topsides)
• Decom. is not a value added activity – operators are risk averse
• Delaying decom costs more in the long run (higher maintenance, engineering + removal costs)
• Highly regulated sector – 25 legislative items (environmental, safety, regulatory and legislation barriers)
Country Steel Jacket Concrete Substructure
Subsea FPSO Total Tonnes (thousand)
UK 227 12 56 17 312 2290
Norway 69 13 54 9 145 1750
Netherlands 118 2 7 0 127 340
Denmark 39 0 0 0 39 114
Type, location, number & size of North Sea O&G
installation
Source: KIMO International
Offshore & Subsea Markets
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Key Topics
• Macro Drivers and Oil Price• Offshore/Subsea markets• UKCS Outlook• Conclusion
Subsea Integrity and Efficiency Conference - London
36%
49%
15%
North Sea Outlook – Subsea Trees Installations
UKCS Outlook
• Projects that have already been signed off will support the subsea activity in the North Sea.
• Redevelopment projects and greenfield projects. Most of them due to 2016-2017.
• Lack of sanctioned projects will lead to significant drop in activity.
Source: Douglas-Westwood
Subsea Hardware Expenditure in Western Europe
2010-2014 2015-2019
41%
49%
9%
UK
Norway
RoWE
Subsea Tree Installations Forecast in the North Sea
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North Sea Outlook – Subsea Vessels
UKCS Outlook
• Majority of the activity is in shallow water.
• Major problem with over supply of subsea vessels.
• Vessel dayrates will continue downward trend.
• Vessel demand is expected to increase as large projects in UK (Rosebank, Kraken) and Norway (Maria) have been sanctioned.
Source: Douglas-Westwood
45%
7%
34%
15%Field Development
Pipeline
IRM
Subsea Intervention
2010-2014 2015-2019
40%
11%
37%
12%
Subsea Vessels Forecast in the North Sea
North Sea Vessel Expenditure by Sector
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14%
13%
37%
11%
12%
13%AfricaAsiaEuropeSouth AmericaMiddle EastNorth America
How do you view the future of the UK oil & gas industry?
Survey and Key Findings
UKCS Outlook
440participants
11%
17%
36%
20%
17%CEO/Director
Senior Manager
Middle/Junior Manager
Skilled Manual
Other
Some Survey Participants …Key Findings
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• Xx
• Xx
• xx
• Offshore drilling volumes less affected in the short term• Uncertainty around oil price recovery – pressure on high-cost activities• Lack of sanctioned projects – lower growth in subsea hardware• Decom. – more relevant in low-for-longer environment• Subsea activity in North Sea going forward on the back of a number of projects
In Conclusion
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Douglas-Westwood Limited
THANK YOU!
Iva Brkic, Research [email protected]
Marina Ivanova, Research [email protected]