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Renewable energies | Eco-friendly production | Innovative transport | Eco-efficient processes | Sustainable resources
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Session 2: Experiences and Session 2: Experiences and Session 2: Experiences and Session 2: Experiences and views of market players views of market players views of market players views of market players
2A: Views on demand: Operators in 2A: Views on demand: Operators in 2A: Views on demand: Operators in 2A: Views on demand: Operators in offshore oil development offshore oil development offshore oil development offshore oil development
Jerome Jerome Jerome Jerome SabathierSabathierSabathierSabathierEconomics and Environment Evaluation Economics and Environment Evaluation Economics and Environment Evaluation Economics and Environment Evaluation
Department Head Department Head Department Head Department Head
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� World demand 2014:
92.4mb/d the smallest
annual increase in five
years
� Ample supply from non-
OPEC countries: US
production over 9 mb/d
� OPEC production over its 30
mb/d allocation
� Large disequilibrium oil
supply/demand balance
� Crude oil price falling back
to 2010 levels
� In this context, what
future for Offshore
Development2
Global Petroleum Context What Impact on Offshore Development
Sources: IFPEN, Argus, IEA
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Offshore Offshore Offshore Offshore Oil & Gas developmentsOil & Gas developmentsOil & Gas developmentsOil & Gas developments
� Offshore Oil & Gas Reserves Offshore Oil & Gas Reserves Offshore Oil & Gas Reserves Offshore Oil & Gas Reserves � Offshore contribution to world hydrocarbons Offshore contribution to world hydrocarbons Offshore contribution to world hydrocarbons Offshore contribution to world hydrocarbons
reservesreservesreservesreserves� Recent Exploration ActivityRecent Exploration ActivityRecent Exploration ActivityRecent Exploration Activity
� Most Promising ZonesMost Promising ZonesMost Promising ZonesMost Promising Zones� Current and Future Offshore ActivityCurrent and Future Offshore ActivityCurrent and Future Offshore ActivityCurrent and Future Offshore Activity� Exploration & Production Investment Exploration & Production Investment Exploration & Production Investment Exploration & Production Investment –––– Past Past Past Past
and Future trendsand Future trendsand Future trendsand Future trends
3
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OilOilOilOil and and and and GasGasGasGas ReservesReservesReservesReserves2013: 3037 2013: 3037 2013: 3037 2013: 3037 GboeGboeGboeGboe
ME, LA, NA: 78% of Oil Reserves – ME, CIS, FE: 75% of Gas Reserves
Sources: IFPEN, IHS
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Region Oil Gboe Gas Gboe Total Gboe
Australasia 5 35 39
C.I.S. 28 60 88
Europe 20 29 49
Far East 20 57 76
Latin America 84 30 114
Middle East 114 297 411
North America 7 3 9
Saharan Africa 4 14 18
Sub-Saharan Africa 45 51 96
World 325 576 901
Oil Offshore: ME, LA, Sub AF: 75% / Gas Offshore : ME, FE, CIS: 75%
OilOilOilOil & & & & GasGasGasGas Offshore Offshore Offshore Offshore ReservesReservesReservesReserves901 901 901 901 GboeGboeGboeGboe: 30% of World : 30% of World : 30% of World : 30% of World ReservesReservesReservesReserves
Sources: IFPEN, IHS
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Oil and Gas Remaining Reserves
� Offshore holds today about 20% of oil reserves and 45% of Gas reserves.
� Current tendency is: � small discoveries onshore, � large discoveries in the deep to ultra deep-offshore and
mainly natural gasSources: IFPEN, IHS
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Oil & Gas recent exploration activity Oil & Gas recent exploration activity Oil & Gas recent exploration activity Oil & Gas recent exploration activity New discoveries mainly in deep offshore…New discoveries mainly in deep offshore…New discoveries mainly in deep offshore…New discoveries mainly in deep offshore…
7777
� Smaller discoveries onshore� Giant fields discovered offshore� DEEP and L’ULTRA-DEEP OFFSHORE: strategic zones
for Oil & Gas companies but exploration remains ver y capital intensive
2011number of number of number of number of discoveries discoveries discoveries discoveries
volu
me
Gbe
p
2012number of number of number of number of discoveries discoveries discoveries discoveries
volu
me
Gbe
p
Gas Oil
Number of discoveries announced 152 (2014) vs. 177 (2013
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ExplorationExplorationExplorationExplorationToday’sToday’sToday’sToday’s Most Most Most Most PromisingPromisingPromisingPromising ZonesZonesZonesZones
� ONSHOREONSHOREONSHOREONSHORE� Irak and Iran� China (mainly for non conventional
hydrocarbons)� OFFSHOREOFFSHOREOFFSHOREOFFSHORE
� Reevaluation of existing zones (ex.: North Sea)
� DEEP OFFSHOREDEEP OFFSHOREDEEP OFFSHOREDEEP OFFSHORE� Brazil and West Africa continental
margin (« subsalt »)� East Africa (Mozambique,
Tanzanie)� Mainy other opportunities
� Mexican Gulf� Mediterranean. � Australia.
� ARCTICARCTICARCTICARCTIC
8888
North SeaBrazil
Mediterranean
East AfricaMediterranean
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sARCTICARCTICARCTICARCTIC
Oil & Gas PotentialOil & Gas PotentialOil & Gas PotentialOil & Gas Potential
9999
PROVED RESERVED• Limited potential – Mainly western Siberia
• Oil: 84 Gboe• Gas: 54 Tcm (318 Gboe)
• More Gas than Oil• Complex et diversified regions: mountains,
ultradeep offshore,...
YET TO FIND• Difficult to assess as very limited exploration• Not so big: between 62 Mbep (TOTAL) and 412
Mbep (USGS).
Source IFPEN – Note Technique : Potentiel pétrolier et gazier de l’Arctique (2012) + Article Eschard, Vially et Bénard (2012)
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Offshore ActivityOffshore ActivityOffshore ActivityOffshore ActivityHydrocarbons LiquidsHydrocarbons LiquidsHydrocarbons LiquidsHydrocarbons Liquids
� Oil offshore production: 21.5 mb/d. About 26% of world production in decline since 2010 as activity in main zones reduced: Europe, Middle East, Africa, North America
� Though offshore projects have recently experienced a slowdown in investment Though offshore projects have recently experienced a slowdown in investment Though offshore projects have recently experienced a slowdown in investment Though offshore projects have recently experienced a slowdown in investment levels, this decline is part of a natural cycle, and activity levels are expected to levels, this decline is part of a natural cycle, and activity levels are expected to levels, this decline is part of a natural cycle, and activity levels are expected to levels, this decline is part of a natural cycle, and activity levels are expected to increase again. Both increase again. Both increase again. Both increase again. Both DeepwaterDeepwaterDeepwaterDeepwater and and and and UltradeepwaterUltradeepwaterUltradeepwaterUltradeepwater are necessary to develop in are necessary to develop in are necessary to develop in are necessary to develop in order to meet our demand outlook order to meet our demand outlook order to meet our demand outlook order to meet our demand outlook
� Perspectives: Rebound in production likely as onshore will continue to decline (Offshore developed by IOC vs. NOC onshore)
10 Sources: IFPEN, IHS, Rystad
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Offshore ActivityOffshore ActivityOffshore ActivityOffshore ActivityNatural gasNatural gasNatural gasNatural gas
� Gas offshore production: 90 Bcfd� About 26% of world production in slight decline since 2010 as
activity in main zones is reduced: Middle East, Europe, North America
� Perspectives: rebound in offshore production likely to reach 30% of total production by 2025
11 Sources: IFPEN, IHS, Rystad
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� Past few years saw a rapid increase in upstream costs (capital and operating cost)
� Many projects are vulnerable to an oil price drop below US$80/bbl (Brent).
12
Global petroleum context Global petroleum context Global petroleum context Global petroleum context Its impact on offshore developmentIts impact on offshore developmentIts impact on offshore developmentIts impact on offshore development
Around one-third of these new projects - amounting to about 3.5 million b/d in 2020 - could be at riskSources: IFPEN, Wood Mackenzie
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OffshoreOffshoreOffshoreOffshore and Onshore and Onshore and Onshore and Onshore drilling Marketdrilling Marketdrilling Marketdrilling Market
� Offshore market : in 2013, activity increasing in all regions
� Number of offshore wells: +10% in 2013 (mainly in GoM, AS and AF)
� Slowdown expected in NA and mainly in LA (Brazil – financing issues).
� Main activity to be located in AF, Australia, India.
� Offshore drilling market increasing by 14% in 2013 to 56 G$
� In 2014, should reach 61 G$ (+10%)
13
� Turnover 2013 +6%
- onshore dirilling: +1%
- offshore drilling: +14%
- Fracturation: -4%
(x2 since 2008)
� Turnover 2014 +6%
- onshore drilling: +3%
- offshore drilling: +10%
- Fracturation: +5%
� Turnover 2015 +5%
Sources: IFPEN, Baker Hughes, Spears
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Offshore platform construction Offshore platform construction Offshore platform construction Offshore platform construction activity and market activity and market activity and market activity and market
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� Turnover 2013 +7%- Const. offshore 2%
- Equipment subsea 20%
- Services prod. offshore 5%
� Estimation 2014 +5%
� Forecast 2015 +3%
Construction Sector mi-2014• FPS/FPSO: -10%,
• Subsea stable
• Jackups drilling rigs +15%,
• Semisubs drilling rigs +17%,
• Drilling ships -14%
-8 à -10% for constructions without
future contract
� Project Complexity for deep and ultra
deep offshore
� No standardization
� Local content requirement in some
countries
� Large project delayed or cancelled
Sources: IFPEN, Baker Hughes, Spears
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� oil industry is known for cyclicality
� In 2015, total E&P investment still increasing
but at moderate rate (+ 4%)
� Majors: stabilize or even decline slightly
� Investment in EU expected to drop
significantly
15151515
Overall Exploration and Production Investment
� NOC and independents keep on investing
� US activity remains high (shales)
� Offshore investment somewhat less impacted
� given world’s need for oil, exploration and
production market is ready to ramp up again
to reach new records
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