Oil & gas companies will spend roughly $135 billion on subsea hardware between 2012 and 2016, an increase of 14% over the preceding five-year period, according to a new report from Douglas-Westwood.
Spending took a hit in 2010 and 2011 as the full effects of the global economic crisis and the Deepwater Horizon spill sunk in. But the subsea equipment market rebounded in 2012, climbing to a projected $19 billion this year. By 2016, total annual expenditures will grow to $32 billion, the World Subsea Hardware Market Forecast 2012-2016 indicates.
The Golden Triangle of offshore Brazil, the Gulf of Mexico and West Africa will account for at least 65% of spending on subsea production and SURF hardware, Douglas-Westwood says. At roughly $20 billion over five years, Africa will remain the largest market for subsea hardware spending. Petrobras aggressive deepwater spending program will push spending in Latin America to $14 billion from 2012 to 2016, up 59% from the $9 billion spent over 2007-2011.
Subsea production hardware spending will total $35 billion over five years, up more than $13 billion from the 2007-2011 period, the report says. Yearly spending on SURF equipment will climb to $16 billion by 2016 as tree installations steadily increase over the next several years. The report forecasts spending on subsea trees to increase by 41% in Africa, 47% in Asia, 131% in Australasia and 105% in Latin America, with more moderate increases in the Middle East, North America and much of Western Europe. Eastern Europe and the former Soviet Union will see a decline of 28% and Norway and the UK will experience 14% and 13% respective decreases in the amount of tree spending over five years
Capex for subsea trunklines will rise, particularly in Eastern Europe and the former Soviet Union ($21 billion), Asia ($10 billion), Australasia ($11 billion) and the Middle East ($6.3 billion). About 95% of the total will be for subsea gas export pipelines, Douglas-Westwood says.
Deepwater hardware expenditures will total $77 billion over the next five years, or 57% of the total market spend. The sum represents a 44% increase over the 2007-2011 period. Spending on hardware in 250-500m water depths will increase by 37%, to $14 billion from 2012 through 2016. Spending in water depths of less than 250m will total $44 billion, down 25% from the $55 billion spent over the previous five years.
The offshore oil & gas industry is being driven by the challenges involved in accessing new reserves, the Douglas-Westwood report concludes. Fields are being developed in deeper waters, from increasingly remote locations and in extreme metocean conditions. In addition, smaller, more widely scattered reserves, which were in the past uneconomic or too technologically challenging to develop, are now benefiting from higher oil prices and more advanced subsea hardware solutions.
New technology is unlocking reserves that would historically have been impossible to access, but at a price, and as a result our study shows the sector has become a very sizable opportunity for the oilfield service and equipment community. OE