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Global Offshore Oil and Gas Outlook John Ferentinos – Infield Systems
Gas/Electric Partnership 2013
Disclaimer
2
The information contained in this document is believed to be accurate, but no representation or warranty, express or implied, is made by Infield Systems Limited as to the completeness, accuracy or fairness of any information contained in it, and we do not accept any responsibility in relation to such information whether fact, opinion or conclusion that the reader may draw. The views expressed are those of the individual contributors and do not represent those of the publishers.
Some of the statements contained in this document are forward-looking statements. Forward looking statements include, but are not limited to, statements concerning estimates of recoverable hydrocarbons, expected hydrocarbon prices, expected costs, numbers of development units, statements relating to the continued advancement of the industry’s projects and other statements which are not historical facts. When used in this document, and in other published information of the Company, the words such as "could," "forecast”, “estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements.
Although the Company believes that its expectations reflected in the forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors could cause actual results to differ from these forward-looking statements, including the potential for the industry’s projects to experience technical or mechanical problems or changes in financial decisions, geological conditions in the reservoir may not result in a commercial level of oil and gas production, changes in product prices and other risks not anticipated by the Company. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties.
© Infield Systems Limited 2013
Infield Systems Ltd.
A globally recognised oil & gas consultancy with a dedicated international team of cross-sector specialists
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Key Global Personnel
34 Energy Professionals covering all geographic regions
Office Locations
London Aberdeen
Houston
Singapore
Head Office
Regional Office
JV/Representative Office
Gregory Brown (Consultant) London
[email protected] +44 207 423 5032
James Hall (Director) London
[email protected] +44 207 423 5024
Steve Adams (International Sales Manager) London
[email protected] +44 207 423 5000
Anna Karra (Consultant) London
[email protected] +44 207 423 5026
Luke Davis (Senior Analyst) London
[email protected] +44 207 423 5023
John Ferentinos (Analyst) London
[email protected] +44 207 423 5036
Products & Services
A leading offshore oil and gas and associated services consultancy
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Data, Reports & GIS Mapping Business Strategy & Analysis Transaction Services
• Offshore specific data covering production infrastructure, rigs, specialist vessels, construction yards, contracts and OFS providers
• Sector specific reports • GIS mapping services covering
operational and forecasted production infrastructure
• Market matching and market tracking – “Match & Track”
• Complete market intelligence outsourcing
• Bespoke sector services • Market entry strategy • Procurement strategy advisory –
“Project Flow” • Ad-hoc sector analysis
• Pre IPO due diligence • Market overview IPO • Debt financing analysis • Distressed asset purchases • Buy/sell side market due diligence • Opportunity identification
I. Macro Market
• Oil – Gas Prices
• Key Industry Trends
II. Offshore Gas Frontiers
• Shale Gas Impact
• East Africa
• Arctic
III. Offshore Capex
• Platforms
• Subsea
Agenda
5
Oil Price 2012
A Tight Trading Range for Brent
70
90
110
130
150
$/b
bl
Trading Range BRENT
Supply Responses
Demand Responses
Brent will likely be traded within a relative narrow range between $100 - $120/bbl
Sources: Infield, EIA 6
• $90/bbl floor:
Would spur supply responses from oil producing countries (i.e. Saudi Arabia)
Riyadh’s 2013 budget: US$219bn (+19%), requires c.$70 oil price minimum
• $120/bbl ceiling:
High prices already driving exploration and development of new resources (tight oil, oil sands, biofuels, ultra-deepwater, harsh environments)
Substantial drag on global economic growth
Gas Price Forecast
Global Gas Demand
Gas Price Dynamics
Price divergence between key markets will narrow
Sources: Infield Systems, BP 7
• Price shocks in the wake of Fukushima etc.
2012:
• Global gas consumption grew by 2%
• Non–OECD consumption grew 2.8%
• OECD consumption grew by 1%.
• Non-OECD will account for 76% of global gas demand growth to 2030
16.5
0
5
10
15
20
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
$/m
mb
tu
Japan EU US
0
1000
2000
3000
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Bcm
OECD Non-OECD China Japan
Offshore Production Gains Ground…
Sources: Infield Systems, BP 8
• Onshore production has levelled-out • More E&P activity is taking place in deeper waters, remote locations & harsh
climates. • 30% of the world’s oil production comes from offshore areas
0
20
40
60
80
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Mill
ion
bar
rels
pe
r d
ay
Onshore Offshore Shallow Water Offshore Deep Water
Onshore vs. Offshore Oil Production
67%
24%
9%
Percentage %
Marginal Fields…
Source: Infield Systems 9
0m.
500m.
1,000m.
1,500m.
2,000m.
2,500m.
3,000m.
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Met
res
Fields On-Stream Year by Reserve Size and Water Depth
0
4,000
8,000
12,000
16,000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Ave
rage
pro
du
ctio
n
rate
(b
oe
pd
)
Year on-stream
Oil Fields Gas field
Fields by Reserve Size & Production Rate
Smaller Fields with
higher production rates
Further – Remote – Harsher
Sources: Infield Systems 10
• Installation location of production platforms - 10km in 1970 Present: Husky’s SeaRose FPSO, Canada – 350km from shore • Chasing viability of marginal fields enables longer tiebacks • Lack of existing offshore infrastructure or onshore refining capacity in new frontiers
Increasing Tieback Length
0 KM
25 KM
50 KM
75 KM
100 KM
125 KM
150 KM
175 KM
200 KM
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Maximum tieback length Average tieback length
2012: 13Kms 2000: 10Kms
Gorgon LNG Phase 1
Albatross
MC Mensa
Saurus, Egypt
Tamar, Israel
Shale Gas Reserves
6,600tcf in 33 countries.
Latin America 1,900tcf , China 1,275tcf, US 482tcf, Canada 388tcf, South Africa 485tcf
Sources: Infield Systems, EIA 11
Effects of Shale Gas
• US could become a net exporter of NG over the next decade
• US currently supplied from Canada and Mexico & LNG shipments from Africa
• US exports might put pressure on Australian LNG and CBM (Coal Bed Methane) projects - Shtokman
Sources: Infield Systems, EIA, BP 12
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
TCF/
year
Shale gas
Tight gas
Onshore conventional
Offshore Coalbed methane
Consumption
US Gas Production (TCF/year) (EIA)
Shallow Platform Installations vs. E&A Wells
Effects of Shale Gas on US GoM
Dramatic effect on US shallow water investment
Sources: Infield Systems, EIA, Reuters, BOEMRE 13
• Continued expectation of low platform installation numbers in the US
• Drillers, service providers and construction operators continue to report low utilisation and have had to switch focus
• However, opportunities do lie in the deeper waters of the GoM
‐ Tiber, Lucius, Hadrian…
0
100
200
300
400
500
600
1970 1975 1980 1985 1990 1995 2000 2005 2010
E&A Wells Platform installations
US GoM Drilling Trends
US GoM Permit Approvals (new wells only)
Shallow water gas market depressed, deep water drilling activity robust
14 Source: BOEMRE
0
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011 2012
Deep Shallow
East Africa – New LNG Frontier
New Gas Fields Offshore East Africa
According to the UGS over 250 Tcf of natural gas may lie off East Africa
15 Source: USGS
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2007 2008 2009 2010 2011 2012
Gas
Res
erve
s B
CF
Mozambique Tanzania
Arctic Resources
412Bboe of Undiscovered Resources - 84% of it is thought to be Offshore
Sources: Infield Systems, USGS 16
Hebron Hibernia
Offshore Arctic Resources
Discovered Natural Gas Reserves (Bcf) by Country
Discovered Oil Reserves (Mbbl) by Country
There are 174 discovered fields in the offshore Arctic - 137 Bboe
• The offshore Arctic is primarily a natural gas play
• 85% is natural gas against 13% are oil
• Discovered resources are 83% Russian (high Arctic and Sakhalin Island):
• Large number of super-giant fields
Source: Infield Systems 17
0
100,000
200,000
300,000
400,000
500,000
600,000
Canada Canada(ArcticOcean)
Norway Russia Russia(Sakhalin)
USA(Alaska)
0
1,000
2,000
3,000
4,000
5,000
Canada Canada(ArcticOcean)
Norway Russia Russia(Sakhalin)
USA(Alaska)
Offshore Arctic – Stop or Go?
Shtokman – Indefinitely Delayed
Kulluk drill rig grounded – Jan 2013
Offshore Arctic faces an extremely uncertain future
• Two speed Arctic
‐ Oil better than gas
‐ Sub-Arctic/ice-free areas better than high-Arctic
‐ Onshore better than offshore
• Unconventional and deepwater resources will continue to hold back Arctic
• Long lead times: a decade until new production
Source: Infield Systems, www.vancouversun.com 18
Global Capex
• A 800$bn Industry until 2018
• Subsea investment is growing faster – 14% GAGR
Sources: Infield Systems, EIA, BP 19
Global Capex by Infrastructure
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
US$
(m)
Pipeline Platform Subsea ControlLine SPM
Offshore Capex 2012-2018
A migration to deeper waters albeit with conventional demand remaining buoyant
NOTE: Global infrastructure spend by region includes subsea, pipeline, platform, control line and SPM installations. Capex in this analysis include EPIC but excludes drilling.
Global:US$706bn
Latin America:US$107bn
North America:US$66bn Asia:US$146bn
Europe:US$135bn
Africa:US$120bn
Austalasia:US$54bn
M.E :US$74bn
21%
56%
84%
11%
35%
44%
21%
86%
10%
84%
16%
27%
58%
89%
62% 18%
20%
Shallow Water
0-499 m
Deep Water
500-1499m
Ultra Deep Water
1500m+
Operational Platforms in 2012
Sources: Infield Systems 21
Operational Fixed: 10,700 Installations Fixed: 185 Operational Floaters: 395 Installations Floating: 28
Operational Platforms in 2018
Source: Infield Systems 22
Operational Fixed: 9,060 Installations Fixed: 280 Operational Floaters: 540 Installations Floating: 60
Energy Engines
Egina FPSO 126 MW 5 units
CLOV FPSO 109 MW 5 units
Energy Engines
Ichthys Floaters 250 MW 10 units
Sunrise FLNG 135 MW 5 units
Prelude FLNG 120 MW 3 units
Energy Engines
Cernambi North 98 MW 4 units
Lula Alto P66 96 MW 4 units
Guanabara FSRU 49 MW 2 units
Subsea Market
Sources: Infield Systems 23
Subsea Tree Installations are increasing…
136
217
0
100
200
300
400
19
90
19
98
20
00
20
02
20
04
20
07
20
09
20
11
20
13
20
15
20
17
20
19
20
21
Rig
un
its
Operational Year
Midwater
Deepwater
Ultradeep Water
Ultra-deep Rig Fleet is increasing…
60%
327
670
0
100
200
300
400
500
600
700
Tre
e In
stal
lati
on
s
Installation Year
Average Field Sanction Point by Water Depth
Field Sanction Points
Current oil price is sufficient to support the vast majority of developments
Source: Infield Systems 24
• Shallow water reserves clustered between $10-30/bbl
• Conventional fields easily viable in all price scenarios
• Deepwater fields: $36 - $80/bbl across regions and operator types.
0m
500m
1,000m
1,500m
2,000m
2,500m
3,000m
3,500m
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90$100$110
Wat
er d
epth
(m
)
Sanction Price ($/bbl)
Shallow
Deep
Ultra Deep
Questions?
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