World Deepwater Market Forecast 2016-2020 Leaflet + Contents

World Deepwater Market Forecast 2016-2020energy business insight

e: [email protected] t: +44 (0)203 4799 505

www.douglas-westwood.com

Aberdeen | Faversham | Houston | London | Singapore

© 2016 Douglas-Westwood

43

By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood

World Deepwater Market Forecast 2016-2020

Chapter 5 : The Deepwater Market ForecastMethodology

Trunklines Model

Trees Master (Surface, Subsea)

FPSS

FPSO

SPAR

TLP

Master Files

Inputs

Costs

Outputs

Data

Subsea Pricing

Capex by Region $ Millions

Capex by Component $ Millions

Multiplied By

Known Data plus Assumptions

Known Data plus Assumptions

FPS Risers

Km of Trunkline

No of ControlsNo of Flowlines

Km of Umbilicals

No of ManifoldsNo of Flying LeadsNo of Jumpers

No of Templates

Assumption per Tree

TrunklinesData

Trees Data

FPU Data

Probability assumed from field status

Assumption

Probability assumed from field status

DW Database

Hardware Cost

DW’s World Deepwater Market Forecast 2016-2020 is produced using a combination of

in-house databases (and external sources for verification purposes) which track projects

on a field-by-field basis. Our in-house model forecasts Capex using this data and estimated

costs of hardware and installation.

Known Data

Known Data

• Prospects• Technologies• Markets


33



Chapter 4 : The Supply Chain

Deepwater Supply Chain – Subsea Hardware

Operators

Oil & gas companies are the customer

group for production hardware & SURF-

related EPC services. Typically, when de-

veloping a subsea field, individual contracts

will be awarded for critical production

hardware components (trees, manifolds)

and for SURF services.

Alternatively, operators may enter into

frame agreements with primary hardware

suppliers, where a commitment is made to

purchasing a certain number of units in a

specified frame agreement.

Operators have ultimate control over

sub-contracted parties and a limited part in

deciding on lower tier suppliers. They often

contract primary hardware suppliers to

choose sub-contracted equipment suppliers.

Design Engineering:

The operator will normally contract a

specialist consultancy for advice on field

development strategies at the front end en-

gineering and design (FEED) stage and also

to create procurement criteria and short

lists for the EPC stage. These companies

can have a substantial influence on contrac-

tor selection.

Primary Hardware Suppliers:

Subsea equipment manufacturers, such as

FMC and Cameron, are contracted directly

by the operator to provide critical process

modules such as trees, manifolds and

controls.

They are likely to have some consultation

with the design engineering company and

also tend to provide an integrated service

by also supplying the SURF and pipeline

hardware to the operator.

Primary hardware suppliers will compete

to provide operators with an integrated

contract which guarantees the operator a

price and quality of service. This improves

operator efficiency as they only have to

contract one supplier.

There are a number of global competitors

that provide such an integrated service,

where necessary sub-contracting specialist

work. The major providers are Aker Solu-

tions, Cameron, FMC, GE Oil & Gas and

Technip.

Trunkline, SURF and Components:

Primary hardware suppliers contract

trunkline and SURF manufacturers if they

are providing an integrated service to the

operator. The operator can also deal with

the individual manufacturers themselves if

required.

Smaller and specialist components are

sourced from subcontractors by the trunk-

line manufacturers, SURF manufacturers or

the primary hardware suppliers themselves.

For example, Nippon Steel & Sumitomo

Metal and Tata Steel focus on the manu-

facture of steel and tubular goods, typically

supplying these to larger companies who

provide an integrated service – but they

may also deal directly with an operator.

CUEL

Deep Flex

KBR

Mustang

Technip

BP

Chevron

ConocoPhillips

CNOOC

Petrobras

Shell

Statoil

Total

Operators

Agility Group

IMI

Proclad

Sumitomo

Tata Steel Europe

2H Offshore

Aibel

Granherne

JP Kenny

Xodus Group

Design Engineering

Aker Solutions

Cameron

Dril-Quip

FMC

GE Oil & Gas

Primary Hardware Suppliers

Trunkline

Manufacturers

Nexans

Oceaneering

Prysmian

Subsea 7

Technip

SURF Manufacturers

Sub-Contractors:

Components

McDermott

Petrofac

Sapura Acergy

Seaway Heavy Lifting

Subsea 7

Technip

Installation Contractor

and

othe

rs...

and

othe

rs...

and

othe

rs...

and

othe

rs...

and

othe

rs...

and

othe

rs...

and

othe

rs...

Figure 22: Subsea Hardware Supply Chain

“The market remains depressed as a

result of sustained low oil price. The ten-

dering activities are competitive and the

timing of new awards to market continues

to be uncertain.”

Subsea 7

N.B. The list of operators, contractors and

service providers presented on this page is

intended to give an overview of the drilling

and subsea hardware supply chain, and is not

exhaustive.


12



Chapter 2 : Drivers and IndicatorsViability of Oil & Gas Developments

The oil price downturn has resulted

in significant cuts to Capex in 2015,

with further reductions to spending

expected in 2016.Deepwater developments have

generally been viable at an oil price of

$30-$85/bbl.

Petrobras has a targeted breakeven

price of $45/bbl for 2015-2019. How-

ever, some Brazilian pre-salt projects

are expected to be economically viable

at a price of $40/bbl.In Africa, Total’s CLOV and Kaombo

projects require relatively high break-

even prices of $60/bbl and $75/bbl

respectively.

IntroductionThe viability of O&G developments de-

pends on oil & gas prices. Following signifi-

cant cuts to Capex in 2015, companies are

making further reductions to their budgets

for 2016 due to the sustained low oil prices.

Notably, French supermajor Total has an-

nounced a planned budget cut of $3bn for

2016. Royal Dutch Shell also plans to make

a further $5bn reduction in spending, fol-

lowing its recent merger with BG Group.Viability of oil & gas developments

The range of oil price at which a field is eco-

nomically viable varies significantly depending

on the type of development and the region.

The oil price reached a 12-year low in Janu-

ary 2016, with the Brent spot price falling to

$26.01 on 20th January (Brent spot price as

of 26th February is $33.80). Deepwater developments are generally

viable between $35-$85/bbl, with offshore

Brazil and W. Africa requiring a higher oil

price of $40-$100/bbl due to many fields

being ultra-deep. However, the oil price downturn has placed

pressure on companies to increase cost

efficiencies for projects which would not

otherwise be economically viable at the

current oil prices of $30/bbl. Reductions in

day rates for newly contracted offshore rigs

have also contributed to reducing break-

even price for deepwater projects.

In Brazil, Petrobras has targeted a breakeven

price of $45/bbl over 2015-2019. However,

some of the pre-salt projects, including

Lula, Sapinhoa and Lapa, are expected to

be economically viable at a lower price of

around $40/bbl. Other developments, such

as Tartaruga, will have a higher breakeven

price due to the size and complexity of

the infrastructure required for the project,

which will require a higher day rate.In Africa, ultra-deep developments such as

Total’s CLOV and Kaombo projects in An-

gola require relatively high breakeven prices

of around $60/bbl and $75/bbl respectively.

Conversely, Tullow Oil’s Jubilee field in

Ghana reportedly has a breakeven price of

around $20/bbl due to low operating costs,

which averaged just $10/bbl in 2014.In North America, key planned deepwater

projects such as Appomattox, Shenandoah

and Stones require an oil price of around

$55/bbl to breakeven. However, the Big

Foot field has a lower breakeven cost of

around $20/bbl. BP’s Mad Dog Phase 2

project is expected to breakeven at around

$60/bbl, following significant revisions to the

development budget.In Australasia, Woodside Petroleum’s

Greater Enfield development has a rela-

tively high breakeven price of around $75/

bbl.

Oil & gas pricesSteady high oil prices and new technol-

ogy in the past have resulted in more

deepwater and ultra-deepwater fields

becoming economically viable. In recent

years, developers have been searching for

reserves by venturing into deeper and more

costly waters.

* A ‘breakeven price’ can be defined as the

price at which new field developments have

an Internal Rate of Return (IRR) of 10-15%.

Figure 4: Breakeven Prices* and Historic & Forecast Onstream Years of Key Deepwater Projects ($/bbl)

Source: Company Reports

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Brea

keve

n Pr

ice

($/b

bl)

Jubilee EginaHeidelberg

Big Foot

CLOV

SapinhoaNorth

Jack/ St Malo

Stones

Lula Sul

Libra

Enfield

Tartaruga

Axis Title

Average Brent Spot Price ($/bbl)Africa

AustralasiaLatin AmericaNorth America


21



Chapter 2 : Drivers and Indicators

Deepwater Focus Areas

Specification requirements of subsea

vessels are largely determined by

a combination of water depth and

metaocean conditions.

Markets with harsh sea states such as

the North Sea will typically need high-

end assets with excellent power rating

and station keeping.

Deepwater markets such as Africa

or Brazil will require larger vessels

with high crane and top-tensioning

capability.

Shallow water, benign regions such

as Asia and the Middle East typically

favour less complex vessels. However,

increasing customer preference for

reliability and operational efficiency is

driving change in these regional fleets.

North America

The North American market is focused

on the GoM which is comprised of a very

large and mature shallow water segment

and ultra-deep water segment. Sea states

are typically benign but occasionally harsh

during the hurricane season which lasts

from June to November.

1,431 24% 1,019m Benign

Latin America

Latin American subsea activity is domi-

nated by Brazil through state-owned oil

company Petrobras. Brazil alone will ac-

count for 19% of global tree installations

over the next five years, 92% of these will

be in ultra-deep water.

1,753 29% 1,123m Medium

Africa

Subsea activity in Africa has historically

been focused in the Gulf of Guinea.

However, East Africa is expected to

become one of the world’s prominent

growth markets over the next decade.

Projects such as Egypt’s Zohr field

development will also contribute to rising

subsea activity in the region.

2,551 39%974m Benign

Australia

The market is a major subsea growth

province with a substantial backlog of

major gas export projects. Similar to the

North Sea, the operating environment

is relatively shallow but challenged by

moderate-to-harsh weather. Deepwa-

ter projects expected to be sanctioned

over the next five years include Hess

Oil Corporation’s Equus field develop-

ment and ConocoPhillips’ Poseidon field

development.

1021%

300mMedium/

Harsh

North Sea

Traditionally, the North Sea is shallow

water with 59% of trees installed in water

depth <250m over 2011-2015. Extreme

metaocean conditions necessitate high

specification vessels.

4502%

188m Harsh

Asia

Asia is a very larg

e, predominately

shallow water market. Activities are cur-

rently focused on Bay of Bengal, Java Sea,

Celebes Sea and South China Sea. Key

planned deepwater projects include ENI’s

Jangkrik field development in Indonesia

and Husky’s Liuhua 29-1 gas development

in India.

3774%

503mBenign/

Medium

Key

2011-2015 Average subsea pro-

duction (kboe/d) in depths > 500m

Typical metocean

conditions

Average tree water depth as of

2015 (all water depths)

2011-2015 % Subsea tree

insalaltion in water > 500m

Figure 18: Subsea Focus Areas


48



Chapter 5 : The Deepwater Market ForecastAustralasia

Although largely thought of as a shallow

water region, Australasia is seeing increasing

focus on deepwater basins, particularly off

the coast of Western Australia.Deepwater expenditure is forecast to total

$ bn over the next five years. This is an

increase of almost % on the previous

five-year period. This is largely driven by

Woodside Petroleum’s Greater Enfield

development, which is expected to be

sanctioned by early 2017.After a quiet start to the forecast period,

DW expects about development wells

to be drilled and completed between 2018

and 2020, which will require expenditure

totalling almost $ bn.Subsea equipment will total $ bn. Subsea

production will account for $ m of

forecast Capex, while SURF will account for

$ bn.

The region is predominantly a gas basin;

hence, operators will be making use of

the vast gas processing capacity available

in various onshore LNG plants that have

been built in recent years. As a result,

no FPS unit is expected to be installed in

deepwater Australasia over the forecast

period.

However, a number of FPS units are expect-

ed to be sanctioned over the forecast period

including ConocoPhillips’ Poseidon FPSO and

Hess Oil Corporation’s Equus FPSS.Trunkline expenditure over the forecast

period will be minimal until 2020, when

we expect the potential development of

ExxonMobil’s Scarborough field, with Chi-

yoda and Saipem currently engaged as the

pre-FEED contractor. A potential stumbling block to the timely

execution of Australian projects such as the

Scarborough gas discovery is the uncer-

tainty about future gas demand – especially

from China.

Capex for Australia is lower than previously

anticipated due to project delays affect-

ing the region. The Equus development

originally expected to come onstream in

2018 has experienced many delays due to

concerns relating to the project economics. Another project experiencing delays is

the Greater Gorgon Phase 3 (Achilles,

Satyr, Yellowglen) project. This is also not

expected to be sanctioned until the end of

the forecast period.

Expenditure to total $ bn over

2016-2020.

% growth on the previous five

years. However, operators are already

revising field development plans and

dismissing exploration programs due

to the low oil price.% of global forecast expenditure.Uncertainty about future gas demand,

especially from China, may affect time-

ly execution of Australian projects.

Figure 36: Australasia – Deepwater Capex by Component

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Expe

nditu

re (

$bn)

Drilling and CompletionSubsea ProductionSURF

TrunklinesFloating Production

Table 8: Australasia – Deepwater Capex by Component

$ million

20152016

20172018

20192020 CAGR 2016-2020

Drilling and CompletionSubsea WellsSurface WellsSubsea Production

Subsea TreesSubsea ControlsTemplates and ManifoldsFlying LeadsJumpers

SURFFlowlinesRigid

FlexibleRisers

UmbilicalsSteelThermoplastic

TrunklinesFloating ProductionTotal

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Chapter 5 : The Deepwater Market Forecast

SURF

SURF: $ bn is expected to be spent over

the next five years. Over the 2011-2015

period, around km of subsea um-

bilicals, risers and flowlines were installed

worldwide, with total Capex amounting to

$ bn. The next five years are expected

to see over km of SURF installed.

This includes approximately km of

flowlines, km of risers and km of

umbilicals.

SURF is primarily driven by the number of

subsea wells and therefore follows a similar

trend to subsea production hardware.

Demand for SURF over the forecast period

will be driven by revisions to development

plans, with a number of projects being de-

veloped as tiebacks to existing infrastructure

rather than with standalone facilities, as this

is often a cheaper and more attractive solu-

tion in a time when companies are under

pressure to cut costs.

Riser length, and therefore expenditure, is

driven by the number of FPS units and wa-

ter depth, with those vessels in ultra-deep

waters requiring significantly longer riser

bundles. Latin America is the leading region

accounting for % of riser km installed

over the forecast period.

In value terms, Africa is the most dominant

region; expected to account for over %

for the 2016-2020 period. In addition,

Africa is expected to experience the highest

growth – its proportion of global Capex will

increase by % from the previous five-year

period.

Latin America and North America contrib-

ute % to the global SURF Capex, whilst

Asia and Australasia will account for % and

% respectively.

A % decline is forecast for Western

Europe, compared to the preceding five

years, due to limited deepwater installation

activities over the forecast period.

Expenditure to total $ bn over

2016-2020.

% decline on the previous five years.

% of global forecast expenditure.

Demand for SURF driven by revisions

to development plans. A number of

projects will be developed as tiebacks

to existing infrastructure rather than

with standalone facilities.

Given the growth in the SURF vessel

fleet, utilisation level will remain low

with little prospects of demand-driven

recovery.

Figure 48: SURF – Deepwater Capex by Region

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Expe

nditu

re (

$bn)

AfricaAsiaAustralasiaEastern Europe & FSULatin AmericaMiddle EastNorth AmericaWestern Europe

Table 20: SURF – Deepwater Capex by Region

Table 21: SURF – km by Component Type

Figure 49: SURF – Historic vs. Forecast Capex

%

%%

%%

%

%

%

2016-2020

%

%

%%

%%

%

%

2011-2015

Africa

Asia

Australasia

Eastern Europe & FSU

Latin America

Middle East

North America

Western Europe

$ bn $ bn

$ million 2015 2016 2017 2018 2019 2020 CAGR 2016-2020

Africa %

Asia %

Australasia %

Eastern Europe & FSU -

Latin America %

Middle East %

North America %

Western Europe %

TOTAL

Km 2015 2016 2017 2018 2019 2020

Flowline

Rigid

Flexible

Risers

Umbilicals

Steel

Thermoplastic

TOTAL

Sustained Low Oil Price Sinks Deepwater Projects, with 2016-2020 Deepwater Spend to Total $137 BillionDouglas-Westwood (DW) forecasts deepwater expenditure to total $137 billion (bn) between 2016 and 2020. This represents a 35% decline compared to DW’s previous edition of the deepwater forecast issued March 2015.

The prolonged low oil price has impacted the deepwater market, with operators considering alternative development options and delaying the sanctioning of new projects, whilst trying to protect returns on their existing investments in the sector. However, projects already under construction are unlikely to be affected. The largest proportion (38%) of the total spend will be attributed to drilling and completion. Subsea production equipment, SURF (subsea umbilicals, risers and flowlines), pipelines and trunklines will represent 34% of total expenditure combined; whilst floating production units will ac-count for 28% of spend over the forecast period.

Expenditure will predominantly be driven by Africa and the Americas, which will account for a combined 87% of total deepwater Capex. Though all regions will be adversely affected by low oil prices, projects that were sanctioned before the oil price downturn will help sustain activity levels in these regions and in addition we expect to see the development of East African gas basins towards the end of the forecast period.

Record levels of backlog established over the 2011-2014 period have somewhat insulated subsea hard-ware manufacturers from the oil price downturn. However, DW expects a further decline in subsea hardware installations in 2017 and 2018 with backlog falling rapidly and new orders trickling in at very low levels. We expect that the subsea OEM’s will feel the full impact of the downturn in 2016/2017 and will face strong competition for the lower volume of projects. In total, it is forecast that the number of deepwater wells to be drilled over the next five years will decline by 3% compared to the preceding five-year period.

From a supply-chain perspective, this point in the cycle is an opportunity to bring through new ap-proaches and technology for deepwater develop-ments to improve efficiency and lower cost. In the long run, we remain of the view that deepwater will be a cost competitive source of world-class hydro-carbon reserves.

DW’s 14th edition of the World Deepwater Market Forecast covers all key commercial themes relevant to players across the value chain in the deepwater sector:• Key drivers – discussion of factors affecting

deepwater activity, including: sustained low oil & gas prices; deepwater production to offset declining production from onshore and shallow water basins; E&P spend of international opera-tors; and Petrobras’ activity in Brazil.

World Deepwater Market Forecast 2016-2020energy business insight

e: [email protected] t: +44 (0)203 4799 505

www.douglas-westwood.com

Aberdeen | Faversham | Houston | London | Singapore

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• Supply chain – detailing the financing of deep-water developments and local content issues. Includes analysis of contracting strategies (e.g. frame agreements), the deepwater drilling rig fleet and day rates, key players and capabilities of each sector within the deepwater market (drill-ing, FPS and subsea hardware).

• Procurement – factors affecting the decisions facing FPS operators, whether to lease or own vessels and details of major leasing contractors.

• Regional forecasts – forecast Capex within each region, including examples of notable projects and operators within the region and countries with most activity.

• Component forecasts – drilling and completion (subsea and surface completed wells), subsea production hardware, SURF, pipelines and trunk-lines and floating production.

• List of deepwater prospects – includes informa-tion on all identified prospects coming onstream from 2016 to 2020 by operator, location, water depth, number of trees, status category and onstream year.

Why purchase the World Deepwater Market Forecast?

DW’s market forecasting is trusted by sector players worldwide, with clients including the world’s top-10 oil & gas companies, top-10 oilfield services compa-nies and top-10 private equity firms.

The report is essential for financial institutions, equip-ment manufacturers, offshore construction compa-nies, drilling operators, oilfield services companies, shipbuilders and oil & gas companies wanting to better understand where and when to make invest-ment decisions.

Our proven approach includes: • Unique and proprietary data – updated year-

round from published sources and insight gained from industry consultation.

• Detailed methodology – the report uses re-search from DW’s ‘Deepwater Database’, an in-house information system exclusive to DW. Our global analyst team is involved in the gathering and analysis of deepwater market data through primary research and professional networks. A project-by-project review of development prospects drives a data-rich market model and forecast.

• Comprehensive analysis – comprehensive examination, analysis and 10-year coverage of deepwater expenditure.

• Concise report layout – consistent with DW’s commitment to delivering value for our clients, all our market forecasts have a concise layout consisting of industry background and supporting materials condensed to enable quick review with ‘speed-read’ summaries of key points through-out.

2016

World Deepwater Market Forecast

Prospects, Technologies, World Markets

2016-2020

© 2016 Douglas-Westwood 2

By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-WestwoodWorld Deepwater Market Forecast 2016-2020

Contents

Table of Contents

1 Summary and Conclusions ......................................7Summary ......................................................................................................................................... 8

Conclusions .................................................................................................................................... 9

2 Drivers and Indicators ........................................... 10E&P Trends – Spending Activity ............................................................................................... 11

Viability of Oil & Gas Developments ...................................................................................... 12

Continued Development of Offshore Reserves ................................................................... 13

Offshore Oil & Gas..................................................................................................................... 14

Oil – Supply & Demand ............................................................................................................. 15

Oil Price Volatility ....................................................................................................................... 16

Oil Price Impacts ......................................................................................................................... 17

Natural Gas .................................................................................................................................. 18

Oil & Gas Challenges ................................................................................................................. 19

Importance of Brazil to the Subsea Market ........................................................................... 20

Deepwater Focus Areas ............................................................................................................ 21

3 Field Development ................................................. 22Field Lifecycle ............................................................................................................................... 23

Drilling and Completion ............................................................................................................ 24

Field Development Concept Selection ................................................................................... 25

Subsea Production Hardware ................................................................................................... 26

SURF and Trunklines................................................................................................................... 27

Floating Production Systems (FPS) .......................................................................................... 28

Vessels ........................................................................................................................................... 29

4 The Supply Chain.................................................... 30Financing ....................................................................................................................................... 31

Deepwater Supply Chain – Drilling and FPS .......................................................................... 32

Deepwater Supply Chain – Subsea Hardware ..................................................................... 33

Deepwater Drilling Fleet ........................................................................................................... 34

Rig Dayrate Analysis ................................................................................................................... 35

Subsea Tree Market Trends ....................................................................................................... 36

FPS Leasing ................................................................................................................................... 37

Supply Issues – Local Content.................................................................................................. 38

5 The Deepwater Market Forecast ....................... 39Introduction ................................................................................................................................. 40

Forecasting and Potential Upside ............................................................................................. 41

Assumptions ................................................................................................................................. 42

Methodology ................................................................................................................................ 43

The World Deepwater Market – By Region ......................................................................... 44

The World Deepwater Market – By Component ................................................................ 45

Africa ............................................................................................................................................. 46

Asia ................................................................................................................................................ 47

Australasia .................................................................................................................................... 48

Eastern Europe & FSU ................................................................................................................ 49

Latin America ............................................................................................................................... 50

Middle East ................................................................................................................................... 51

North America ............................................................................................................................ 52

Western Europe .......................................................................................................................... 53

Drilling and Completion: Subsea Completed Wells ............................................................. 54

Drilling and Completion: Surface Completed Wells ............................................................ 55

Subsea Production Hardware ................................................................................................... 56

SURF .............................................................................................................................................. 57

Trunklines ..................................................................................................................................... 58

Floating Production Systems by Region .................................................................................. 59

Floating Production Systems by Type...................................................................................... 60

6 Appendix .................................................................. 61Deepwater Prospects ................................................................................................................ 62

Data and Text Conventions ...................................................................................................... 66



Contents

Figures

Figure 1: Global Deepwater Capex by Region 2011 - 2020 ...................................................................8

Figure 2: Global Deepwater Market Forecast Comparison (2015 Vs 2016) .................................9

Figure 3: Global Deepwater Rig Demand & Utilisation (2000-2016) .................................................9

Figure 4: Breakeven Prices* and Historic & Forecast Onstream Years of Key Deepwater

Projects ($/bbl) ............................................................................................................................................................. 12

Figure 5: Global Oil Supply mix Shallow/Deep Split 2001-2021 ....................................................... 13

Figure 6: Onshore vs Offshore Oil & Gas Production, 2005-2021 ................................................... 14

Figure 7: Global Subsea Hardware Capex by Component 2011-2020 .......................................... 14

Figure 8: Oil Price & Demand,1990-2015 ....................................................................................................... 15

Figure 9: World Liquids Production Growth, 2005-2015 ..................................................................... 15

Figure 10: Historical Brent and WTI Oil Prices, January 2010-January 2016 ................................ 16

Figure 11: Average Annual Brent Spot Price Forecasts, 2010-2020 .................................................. 16

Figure 12: O&G Sector Average Stock Performance Index, June 2014-Feb 2016 ................... 17

Figure 13: Quarterly Visible Subsea Production Tree Orders, Q1 2008-Q3 2015 ................... 17

Figure 14: Natural Gas Prices ($/mmBtu), 2010-2020 ........................................................................... 18

Figure 15: Henry Hub Annual Average Spot Price Forecasts, 2010-2020 ..................................... 18

Figure 16: Natural Gas Price ................................................................................................................................. 19

Figure 17: Brazillian Offshore Basins................................................................................................................... 20

Figure 18: Subsea Focus Areas ............................................................................................................................ 21

Figure 19: Completion Strategy and Deepwater Field Development Concept Selection ..... 25

Figure 20: Typical Lending Cycles in the Offshore Sector ...................................................................... 31

Figure 21: Drilling and FPS Supply Chain ......................................................................................................... 32

Figure 22: Subsea Hardware Supply Chain..................................................................................................... 33

Figure 23: Rig Managers of Existing Deepwater Rigs ................................................................................ 34

Figure 24: Rig Managers of Deepwater Rigs Under Construction ..................................................... 34

Figure 25: Deepwater Rigs Currently On Order by Shipyard .............................................................. 34

Figure 26: Dayrates of Semi-submersibles, Drillship and Jackup Drilling Rigs ............................... 35

Figure 27: Average Dayrates of Deepwater Drilling Rigs ...................................................................... 35

Figure 29: Visible Subsea Production Hardware Orders ......................................................................... 36

Figure 28: Market Share of Subsea Production Hardware Suppliers ................................................ 36

Figure 30: Leasing Contractors of Existing and Under Construction Deepwater Vessels ..... 37

Figure 31: Trees Installed by Category .............................................................................................................. 41

Figure 32: Global – Deepwater Capex by Region ..................................................................................... 44

Figure 33: Global – Deepwater Capex by Component .......................................................................... 45

Figure 34: Africa – Deepwater Capex by Component ............................................................................ 46

Figure 35: Asia – Deepwater Capex by Component ............................................................................... 47

Figure 36: Australasia – Deepwater Capex by Component ................................................................. 48

Figure 37: Eastern Europe & FSU – Deepwater Capex by Component ........................................ 49

Figure 38: Latin America – Deepwater Capex by Component .......................................................... 50

Figure 39: Middle East – Deepwater Capex by Component ............................................................... 51

Figure 40: North America – Deepwater Capex by Component ....................................................... 52

Figure 41: Western Europe – Deepwater Capex by Component .................................................... 53

Figure 42: Drilling and Completion: Subsea Wells – Deepwater Capex by Region ................. 54

Figure 43: Subsea Drilling – Historic vs. Forecast Capex ........................................................................ 54

Figure 44: Drilling and Completion: Surface Wells – Deepwater Capex by Region ................ 55

Figure 45: Surface Drilling – Historic vs. Forecast Capex ....................................................................... 55

Figure 46: Subsea Production Hardware – Deepwater Capex by Region .................................... 56

Figure 47: Subsea Production Hardware – Historic vs. Forecast Capex......................................... 56

Figure 48: SURF – Deepwater Capex by Region ........................................................................................ 57

Figure 49: SURF – Historic vs. Forecast Capex ............................................................................................ 57

Figure 50: Trunklines – Deepwater Capex by Region .............................................................................. 58

Figure 51: Trunklines – Historic vs. Forecast Capex .................................................................................. 58

Figure 52: Floating Production Systems – Deepwater Capex by Region ....................................... 59

Figure 53: Floating Production Systems – Historic vs. Forecast Capex ........................................... 59

Figure 54: Floating Production Systems – Deepwater Capex by Type ............................................ 60

Figure 55: Floating Production Systems – Historic vs. Forecast Capex ........................................... 60



Contents

Tables

Table 1: International E&P Expenditure ($ million) .................................................................................... 11

Table 2: E&P Expenditure (Consolidated) ..................................................................................................... 11

Table 3: Selected Majors’ Oil Production 2005-2015 ............................................................................... 13

Table 4: Global – Deepwater Capex by Region .......................................................................................... 44

Table 5: Global – Deepwater Capex by Component ............................................................................... 45

Table 6: Africa – Deepwater Capex by Component ................................................................................ 46

Table 7: Asia – Deepwater Capex by Component .................................................................................... 47

Table 8: Australasia – Deepwater Capex by Component ...................................................................... 48

Table 9: Eastern Europe & FSU – Deepwater Capex by Component ............................................. 49

Table 10: Latin America – Deepwater Capex by Component ............................................................ 50

Table 11: Middle East – Deepwater Capex by Component ................................................................. 51

Table 12: North America – Deepwater Capex by Component ......................................................... 52

Table 13: Western Europe – Deepwater Capex by Component ...................................................... 53

Table 14: Drilling and Completion: Subsea Wells – Deepwater Capex by Region ................... 54

Table 15: Drilling and Completion: Subsea Wells – Units by Component Type ......................... 54

Table 16: Drilling and Completion: Surface Wells – Deepwater Capex by Region .................. 55

Table 17: Drilling and Completion: Surface Wells – Units by Component Type ........................ 55

Table 18: Subsea Production Hardware – Deepwater Capex by Region ...................................... 56

Table 19: Subsea Production Hardware – Units by Component Type ............................................ 56

Table 20: SURF – Deepwater Capex by Region.......................................................................................... 57

Table 21: SURF – km by Component Type .................................................................................................... 57

Table 22: Trunklines – Deepwater Capex by Region ................................................................................ 58

Table 23: Trunklines – km by Region .................................................................................................................. 58

Table 24: Floating Production Systems – Deepwater Capex by Region ......................................... 59

Table 25: Floating Production Systems – Units by Region ...................................................................... 59

Table 26: Floating Production Systems – Deepwater Capex by Type .............................................. 60

Table 27: Floating Production Systems – Units by Type .......................................................................... 60

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