Our annual reports show Asia Pacific deepwater production emerging as a high-growth opportunity – albeit from a small base – as depleting shallow water fields drive the industry into deeper waters. Deepwater currently accounts for 7% of regional offshore production, but prospects are for a rise to 17% by 2020. This will result in Asia Pacific accounting for 20% of the global $223 billion deepwater Capex over the next five years. Spend on drilling and completion of deepwater development wells could rise from some $400 million in 2012 to exceed $2 billion by 2017.
But this opportunity is not without its challenges. Many believe the region’s vessel fleet is not up it, with concerns over technology which is 30 years old, and station-keeping near platforms. “It seems like this region is where the old vessels come to die” said one company executive. Technical challenges also include on-going repercussions for increased drilling equipment specifications following the Macondo incident, the need to develop HPHT reservoirs and ones with high CO2 and H2S content.
On the political front, the South China Sea could hold large reserves but is the subject of disputes between bordering nations. The need for local content also features, with some NOCs wanting to encourage use of locally owned-rigs.
Jason Waldie, Douglas-Westwood, Singapore
+65 6635 2000 or Jason.Waldie@DouglasWestwood.com