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Another 1,470 Ultra-Deep Wells by 2021

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By Wendy Laursen 2015-06-11 23:22:19

Growing oil and gas activity in ultra-deepwater fields is expected lead to the spudding of 1,470 new wells by 2021, a 68 percent increase on the previous seven years.

In the latest World Drilling & Production Forecast, Douglas-Westwood (DW) predicts combined oil and gas production from ultra-deep (>1,000m) fields will grow 7.7 percent year-on-year over 2015-2021 from 6.5 mboe/d to 10.2 mboe/d. 

This contrasts with shallow water (< 500m) predictions where DW expects growth at just two percent year-on-year, from 37 mboe/d to 42 mboe/d (oil and gas combined). The limiting factor here is the maturity of many shallow water oil plays including the North Sea and South East Asia.

While it might seem from these figures that the ultra-deep segment is immune to low oil prices, this is not really the case. At these water depths, only the most highly productive plays are being targeted, and deepwater projects typically have funding secured several years ahead of first production. Therefore there is generally a lag between oil price fluctuations and a drop off in activity. Reflecting this, DW does predict see a slowdown in growth by 2020.

Leading the way with increased oil production will be the historically big deepwater producers – Angola, Brazil, Nigeria and the US. The latter will see the strongest growth of the four with ultra-deepwater oil output set to climb from 1.2 mb/d in 2015 to 1.7 mb/d in 2021. This will be the result of 11 floating production platforms being brought online, including Anadarko’s Lucius spar, Chevron’s Jack/St. Malo and BP’s Mad Dog Phase 2. 

This, combined with Petrobras’ continuing success in Brazil’s pre-salt reservoirs and West Africa’s ultra-deepwater plays apparent resilience to the oil price downturn, global ultra-deepwater oil production will rise from 5.5 mb/d in 2015 to 7.7 mb/d in 2021.

Gas Output Will Double

Some of the world’s largest producers will be responsible for these gains in oil output, but gas production will grow twice as quickly – more than doubling from 1.1 mboe/d in 2015 to 2.5 mboe/d in 2021. While much of this growth will come from established producers, ultra-deepwater gas will begin to be exploited in countries such as Equatorial Guinea and Mozambique. Both are likely to see FLNG facilities installed on ultra-deepwater fields late this decade.

In Equatorial Guinea, Ophir Energy is planning an FLNG solution for seven discoveries, with project economics boosted last year by Silenus East discovery. However, uncertainty exists over potential buyers for the LNG.

In Mozambique, ENI will install at least one FLNG vessel on the Coral field by 2021, with further vessels a possibility for Coral and the neighboring Mamba field in the years after.

The higher growth in ultra-deep gas production is due to such fields being specifically targeted (though some of the growth is attributed to increases in associated gas production). Much of the non-associated gas growth can be attributed to South East Asia and Africa. 

A resolution to the current stand-off between the Reliance-BP consortium and the Indian authorities over the gas tariff for the ultra-deep KG-D6 block would see much-needed reinvestment into the project, eventually boosting output. In Indonesia, significant gas output is expected from Chevron’s IDD project despite the company being forced to scale back on its plans due to issues with production sharing contracts.

DW anticipates $378 billion will be spent on floating production platforms and subsea hardware over the next seven years. Forty-five percent of this will be spent on ultra-deepwater fields, reflecting their importance in the global oil and gas supply picture.