KUALA LUMPUR (Nov 25): Deepwater is the fastest-growing upstream oil and gas resource theme.
In a statement on Thursday (Nov 24), global research and consultancy group Wood Mackenzie (WoodMac) said that from just 300,000 barrels of oil equivalent per day (boe/d) in 1990, production is expected to hit 10.4 million boe/d in 2022.
It said that by the end of the decade, that figure should pass 17 million boe/d.
WoodMac said deepwater production is set to increase by over 60% between 2022 and 2030, growing from 6% to 8% of overall upstream production.
It said ultra-deepwater production from depths of 1,500 metres and above is growing fastest, and by 2024 it will account for more than half of all deepwater production (WoodMac's definition is 400 metres of water depth or above).
The firm said Brazil remains the leading deepwater producer, accounting for around 30% of current global capacity, and will continue to grow.
Guyana, the most significant new entrant, will be producing one million boe/d within the next five years.
In total, 14 other countries will contribute to the deepwater supply mix in the coming years, it said.
Small number of key players
WoodMac said despite the diversification of sources and of corporate participants, control over major deepwater projects sits in the hands of relatively few companies.
It said just eight companies account for 65% of deepwater production and 67% of the remaining project value.
The firm said Petrobras and the seven majors dominate deepwater production, operating 22 of the top 25 deepwater assets.
It said Petrobras’ deepwater portfolio is around twice as big as its nearest peer, Shell, which stands out among the majors for leading production and cash flow.
ExxonMobil and TotalEnergies show the highest rates of growth this decade.
Supply chain constraints
WoodMac said service companies have made huge fleet reductions for key equipment, such as floating rigs and production systems, since the peaks of the 2010s.
It said that with activity levels growing, equipment and services availability will be a constraint.
The firm said cost inflation will continue to risk project economics as higher utilisation combines with higher commodity prices.
In some regions, deepwater rig costs have doubled compared to 2021 day rates.
WoodMac said this has hit global hotspots such as the US Gulf of Mexico and Brazil hardest. Gato do Mato in the Brazilian pre-salt, for example, will be delayed by up to two years due to rising costs.