August 2013, Vol. 240 No. 8


Wood Mackenzie Forecasts Rise In Deepwater Markets

Drilling activity and spending will significantly increase in global deepwater markets over the next decade, according to a study from Wood Mackenzie. The Future of Global Deepwater Markets study indicates well spend is expected to rise from US$43 billion in 2012 to US$114 billion in 2022, challenging the industry to keep up with this unprecedented growth.

Considering the deepwater sector has eclipsed that of onshore and shallow water in the last decade in both discovered volumes (41%) and value created ($351 billion), this increase is not surprising. In addition, Wood Mackenzie saw 39% growth in deepwater and Arctic net acreage licensed by the 20 leading deepwater players in 2012.

“Deepwater has accounted for most of the discovered volumes during this time, but this has not been without increasing technical and commercial challenges,” said Malcolm Forbes-Cable, senior management consultant at Wood Mackenzie and author of the study.

The study indicates global drilling activity in the Gulf of Mexico returned to pre-Macondo highs in 2012 and forecasts bullish growth in deepwater, maintaining an overall compound annual growth rate of 9% over the next decade. Arctic drilling will also start to pick up by the end of the decade; however, it will only represent 3% of the wells drilled out to 2022.

Wood Mackenzie believes the number of exploration, appraisal and development wells will from 500 to 1,250 wells per year.

“To meet the forecasted well demand the fleet will require 95 additional deepwater rigs to be constructed between 2016 and 2022, representing US$65 billion of investment,” said Forbes-Cable. “This will require the longest period of deepwater rig construction to date, representing a change for the deepwater sector from cyclical to sustained growth.”

Existing rig orders and new-builds required to meet demand suggest that the rig contractors will need an additional 37,000 workers in the next decade. According to Wood Mackenzie, this cannot be met with existing personnel and the historical rate of recruitment.

This tightness in the deepwater rig market has been driven by an accelerated shift to new-build rigs by operators in the wake of Macondo, which has set off increased regulation and heightened the focus on risk mitigation by the operators.

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