By now, astute readers have noticed that we have added another editorial component to our monthly lineup at E&P. In January, the magazine inaugurated a feature called “Industry Icons.” By definition, these “icons” are individuals who have made a significant contribution to the oil and gas industry and whose actions will provide direction for technology development in the next decade.
Many of the people who will be in the spotlight as Industry Icons this year have devoted their careers to developing technologies that are helping to bring more oil and gas reserves into production. They are people who were able to weather the ups and downs of the industry without losing sight of their goals.
During our present global recession, it is encouraging to take a look at how far the industry has come in the last 30 years and to take stock of the people who have helped make that progress possible. Today, as companies once again make personnel cutbacks in response to financial pressure, it is important to remember that people are the backbone of the oil and gas industry and that the creativity and vision of individuals continue to shape the future.
With any luck, the future will take on a rosier glow soon. There is optimism at present, and if predictions are on target, we should see better times in the next six months.
According to Steven Kopits, managing director of Douglas-Westwood LLC in New York, the global offshore E&P business will see a “delicate recovery” soon.
Kopits presented his views about the industry at an event in mid-January sponsored by the Society for Underwater Technology in Houston. According to Kopits, the global E&P spend, which was down 15% in 2009 — from US $464 billion in 2008 to $395 billion last year — will recover by 11% in 2010 to $439 billion.
Capex is expected to grow materially if the oil price stays above $85 and to materially decrease if oil prices fall much below $60, Kopits said, noting that E&P companies prepared their 2010 budgets based on $70 oil.
Not surprisingly, a lot of investment in 2010 and beyond will go to offshore operations. “The world will increasingly rely on offshore and deep water,” he said.
Kopits expects deepwater fundamentals to remain solid. As support for this view, he pointed to the robustness of the high-spec deepwater sector, where 38 drillships and 41 semisubmersible drilling rigs are on order. The number of newbuilds is not the only good omen, Kopits said, noting that Petrobras has budgeted $174.4 billion for deepwater development 2009-2013. Deep water will lead the way, according to Kopits, “but at a price.” There will be challenging times ahead.
Douglas-Westwood expects offshore oil and gas production and spend to grow, with the total spend increasing from $260 billion (2008) to $360 billion (2013).
Although FPSOs had “a pretty miserable year” in 2009, Kopits believes the long-term prospects are very good. He also anticipates continuing growth in LNG capacity. And although the subsea processing sector was hit hard by the recession, Kopits believes it bottomed out in 4Q 2008 and that trends indicate it will recover to normal levels this year.
So in a nutshell, the industry is beginning the next upswing, but with far less rapidity than it descended to its most recent nadir.
“No great ‘Hurrah!’ is anticipated,” Kopits said, but there will be a turnaround this year.
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