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Offshore/Gulf of Mexico Report Offshore Drilling: 5-Year Projection is $189B "Over the next five years it is expected that 15,000 offshore wells will be drilled worldwide, at a total cost of some $ 189 billion. Of these wells nearly 4,500 will be exploratory costing $75 billion, and around 10,500 will be development, costing $114bn. It is estimated that drilling and completion expenditure in 2003 was $36 billion. Spending levels are expected to grow somewhat over the next two years and then decline slightly, stabilising at about $37 billion per year." These are among the findings of the sec- ond edition of The World Offshore Drilling Report, published by Douglas- Westwood. Going Deeper The largest change that is forecast by the energy analysts is continuing growth in deepwater drilling (over 500 m water depth) which contrasts with a long-term decline in shallow water activity. "In the last decade reductions in available shal- low water drilling opportunities have been counter-balanced by increasing deepwater activity. On average around 3,000 to 3,200 offshore wells are drilled each year of which 12 percent are now in deepwaters. These are expected to increase to around 17 percent of all wells drilled in 2008, with $56bn (30 percent of the total) forecast to be spent globally on drilling and completing deepwater wells over the next five years. This is an increase from $37bn (22 percent of the total) in the previous 5-year period," said study author, Dr. Michael R. Smith of EnergyFiles Ltd. Africa and Latin America saw deepwa- ter drilling expenditure exceeding shal- low water drilling expenditure for the first time in 2003 and the gap will increase in both regions through the forecast period. With the exception of the Middle East where there is no deep- water activity, all other regions should see some shift from shallow to deepwa- ter. "There will be significant changes in some regions. North America, at $57 bn will again have the highest share of the total spend, increasing (compared to the previous five-year period) by $3.4 bn (six percent growth) even though the total number of wells drilled will decline slightly." "Latin America and Africa are forecast to see an increase in expenditure of $6.1 bn and $8bn respectively, a growth of around 43 percent. Although Asia's forecast five-year spend is about the same as the previous period, the outlook for Western Europe is a decline of 12 percent, despite cost escalation." High Spec Rig Demand "The deep and ultra-deepwater rig market is expected to remain at high uti- lization rates throughout the period, especially for drillships and fifth genera- tion semisubmersible rigs water depth rated greater than above 1,500 m. Water depth capabilities will continue to grow beyond the current drilling record of 3,053 m. "The shallow water semisub- mersible market will be generally weak- er, but decline in the Gulf of Mexico and the North Sea will be counter-balanced by a pick-up in demand in West Africa, India and China, at least over the first two years of the five-year period. "Demand for high specification jack- ups is likely to remain strong as new gas projects are identified, particularly for Gulf of Mexico deep reservoir gas drilling. Consequently, most new expen- diture on drilling rigs is expected to be directed at upgrades of both jackups and floating rigs to allow faster drilling and deeper water and/or deeper reservoir drilling." Opportunity Constraints "Drilling levels increased through the 1990s in an environment of increasing energy demand and stable energy prices linked to improvements in technology. However, over the next five years drilling levels will become opportunity- constrained and a slight decline is fore- cast of around 8 percent. Numbers of wells drilled and expenditures may not increase dramatically even if there is real oil price growth. Furthermore, better development wells mean fewer will be needed per field. "Some growth is possible in the Persian Gulf but this would depend on the controlling governments, primarily Iran and Saudi Arabia, encouraging investment to a much greater extent than they do now. "The World Offshore Drilling Report" con- tains 215 pages, 93 figures and 49 tables. It is published by energy analysts Douglas- Westwood and is part of a series used by over 200 organisations in 32 countries worldwide. For more information visit: www.dw-l.com, or e-mail John Westwood at john@dw-l.com Atlantic Drydock Provides Roehrig Fix Atlantic Dry Dock Corp. (Atlantic), in Jacksonville. Fla.. completed a six- week overhaul on the Francis E. Roehrig. a 85 x 24 ft. (25.9 x 7.3m) tugboat owned and operated by Roehrig Maritime. Port of New York. Comprehensive refit and repairs includ- ed changing out the two Caterpillar D- 398 engines with new 3512 Caterpillar engines, a new steering system, over- hauling or replacement of shafts, pro- pellers and rudders, installation of Fernstrum keelcoolers. and other gen- eral life extension repairs. To complete the life extension of the tug. the under- water hull and topside was blasted and painted. The Francis E. Roehrig was delivered on-time and on-budget. "I picked Atlantic because of their competitive pricing, reputation for quality workmanship and fast, on-time delivery." Chris Roehrig. President of Roehrig Maritime said. "I am very pleased with the project outcome, it met all of my expectations and I would use Atlantic for any of my future work." Circle 45 on Reader Service Card FPSO Conversion Begins in Brazil In working on what is claimed to be the largest and most complex offshore conversion project undertaken to date- in Brazil, the conversion of the FPSO P-48 (formerly the VLCC Stena Concordia). FELS Setal SA. the Brazilian subsidiary of Singapore's Keppel Offshore & Marine, has achieved five million work hours with- out a Lost time Incident. U.S.-based Kellogg Brown & Root's subsidiary Halliburton Produtos Ltda awarded FELS Setal the contract for the marine conversion of the FPSO in February 2001. When completed P-48 will have an oil processing capacity of 150.000 bbl per day. and w ill be deployed with Petrobras in the Caratinga filed in the Campos Basin, offshore Brazil. What About Cuba? USCG Accelerates OPC Program The U.S. Coast Guard and Integrated Coast Guard Systems (ICGS) announced that preliminary design and final requirements work will com- mence immediately on the new Offshore Patrol Cutter (OPC) program. This effort will lead to a new type of highly capable, cutting-edge, medium- endurance cutter. This accelerates the effort to launch the OPC by a full three years, compared to the Deepwater pro- gram's originally proposed schedule. This initial OPC contract assigned to ICGS establishes the critical first-step engineering efforts that will occur over the next 12 months. Northrop Grumman's Ship Systems sector has the lead on the OPC design effort with some of the contract going to their joint venture partner. Lockheed Martin, for co-development of engi- neering design and system integration. Each partner has been awarded a sub- contract to begin the effort, the full share of which will be determined as a result of technical scoping and level of effort determination. "We are ready now to accelerate the design and production of this critical component of the Deepwater fleet," said Dr. Philip A. Dur. chairman of the board of ICGS and president of Northrop Grumman Ship Systems. The notional design of the OPC antic- ipates a 341-ft. vessel with capabilities and equipment similar to the Coast Guard's new National Security Cutter, a 421-ft. world-class cutter that is com- pleting final design and is soon to com- mence construction. The final mission requirements and detail design of the OPC will be refined as a result of this contract, with addi- tional funding available for follow-on contracts. With this accelerated con- tract. it is now expected that the first cutters could enter the Coast Guard fleet several years ahead of the original schedule date in 2012. Political allegiance notwithstanding, continuing unrest and war in the energy critical Middle East continues to wreak havoc with world oil prices, with consumers around the world struggling to keep up with fast escalating gasoline prices. While (at press time) the benchmark prices for a barrel of crude have settled just under $40, the situation has spurred new exploration and pro- duction ventures, one such speculation in the Gulf of Mexico off of Cuba. According to a recent report in The Economist (June 5, 2004 edition, page 48), Spain's Repsol has moved into position a Deep Water drilling rig off of the country's northwest coast with the intention of drilling two wildcat wells in what could amount to a successful attempt to energize a failing economy. Should success be met — which, depending on many different sources is far from certain - it will interesting to watch big oil's potential pressure on Washington to eliminate the trade embargo on the country. While the prospect is interesting for commercial and political reasons, the immediate future may not be so immediately known, as - depending on the quality and quantity of product found among the country's 59 offshore blocks - development and delivery could take up to five years and $1.5 billion. 24 Maritime Reporter & Engineering News
