oil spill 2010

Drilling exploration and spending in deepwater oil and natural gas regions across the world is expected to touch $114bn in the next decade from $43bn in 2012, according to a new report, ‘The Future of Global Deepwater Markets’, published by energy and mining research group Wood Mackenzie.

The study found that drilling activity and deepwater spending worldwide will almost triple by 2022 by maintaining an overall compound annual growth rate of nine percent, reported Platts.

Wood Mackenzie senior management consultant and author of the study Malcolm Forbes-Cable said: "To meet the forecasted well demand the fleet will require 95 additional deepwater rigs to be constructed between 2016 and 2022, representing $65bn of investment."

"This will require the longest period of deepwater rig construction to date, representing a change for the deepwater sector from cyclical to sustained growth," Forbes-Cable added.

Wood Mackenzie in the report said that global drilling activity returned to high levels in 2012, after the BP Macondo disaster in the deepwater Gulf of Mexico in 2010.

"The study found that drilling activity and deepwater spending worldwide will almost triple by 2022."

The study suggests that when most firms intend to increase their deepwater positions, they must balance internal factors like exposure to technical risk, capital allocation and budget constraints, as well as technological capabilities and workforce management.

In addition, the report forecasts that Arctic drilling would start to pick up by the end of the decade, representing only a marginal three percent of the wells drilled by 2022.

Forbes-Cable said that despite its reputation as a mature oil and gas producing province, activity in the Gulf of Mexico is expected to grow at levels in line with the overall global deepwater growth.

"You wouldn’t classify it as a mature region yet in terms of its deepwater activity," Forbes-Cable added.

"The compelling thing about the Gulf of Mexico is you have a number of plays and each one of those plays stand alone as world-class. While some of them are more mature than others, there are frontier plays such as the Paleocene, where we expect to see continued growth."

Forbes-Cable noted that the quest for oil will be the chief driver of growth in offshore activity in the next decade.

In addition, the study found that there was a 39% year-on-year growth in deepwater and Arctic net acreage licensed by 20 oil majors in 2012.

Wood Mackenzie predicts that the number of exploration, appraisal and development wells will rise by 150% from about 500 wells per year to 1,250 wells per year.

Image: Oil spill in Gulf of Mexico in 2010. Photo courtesy of US Navy.