SSTBdaily2

The 2015 Subsea Tieback Forum & Exhibi-tion kicked off on Tuesday night as a high number of delegates representing all facets of the sector gathered at the conference’s opening reception. The exhibition returns to the host city of New Orleans after being held in San Antonio, Texas in 2014.

According to totals provided by PennWell conference organizers on Tuesday night, the number of delegates registered by opening day was just shy of 3,000. More than 2,970 packed the Ernest N. Morial Convention Center, al-ready upping the record-breaking attendance number of 2,660-plus from opening night totals in 2014.

Attendance was bolstered by strong interest in the subsea market, which has continued to remain vibrant even in the midst of the gen-eral market downturn. Although challenging market conditions may yet stall some high-cost or high-risk subsea projects, the sector has remained somewhat insulated from the worst effects of falling oil prices.

A recent report from Infield Systems Ltd. affirms these trends (see full story on page 4 of the Day 1 SSTB Daily). Even with falling oil prices, Infield’s new Interim Subsea Market Report to 2019 forecasts growth potential for the sector over that time frame. If oil prices recover, the firm predicts that subsea capex could grow at a compound annual growth rate of 11.1% until 2019.

Companies occupying the subsea market might still tussle with some market fall-out, albeit to a more muted degree. Infield predicts a dip in subsea pioneer Statoil’s subsea capex this year and next, levelling off in 2016. How-ever, in 2018, Statoil’s subsea capex is shown to grow substantially, with a small decline in 2019. ExxonMobil’s subsea capex is forecasted to stay less prone to such strong fluctuation, with a noticeable decline in 2015, but a quick rebound in 2016.

PennWell conference organizers confirmed that nearly 500 delegates were present at the opening session to hear the speakers, including two presentations from executives with leading operating companies. A speech from Don Schlater, chairman of the Society of Underwater Technology’s Treasurer & Training Committee, got the conference underway. Sub-sea Tieback Forum and Exhibition Advisory Board Chairman Antonio Critsinelis of Chevron delivered the conference’s opening remarks. Attendees got a glimpse into the subsea mar-ket’s future when Paul Jones, also of Chevron, delivered the keynote presentation. It was en-titled “Subsea 2015: A crystal ball view of our business, our technologies, and our value.” The comments were especially timely and of inter-est to delegates since Chevron and recently announced that it had expanded its GoM acreage and operatorship, working with BP and ConocoPhillips to explore and appraise 24

SSTB schedule

THURSDAY, MARCH 5

7:00 AM – 8:00 AMContinental Breakfast,

Level 2, New Orleans Theater Foyer

7:30 AM – 1:30 PM Registration Open

Exhibit Hall H

8:00 AM – 9:30 AMSESSION 4,

Level 2, New Orleans Theater

9:00 AM – 1:30 PMExhibit Hall Open,

Exhibit Hall H

9:30 AM – 10:30 AMCoffee Break, Exhibit Hall H

10:30 AM – 12:00 PM SESSION 5,

Level 2, New Orleans Theater

12:00 PM – 12:45 PM Delegate Lunch

Exhibit Halls H & I

12:45 PM – 1:15 PMNetworking Dessert

Exhibit Hall H

1:15 PMHarley Davidson

Motorcycle GiveawayExhibit Hall H

1:20 PM – 1:40 PMSubsea Engineering Program Updates

Level 2, New Orleans Theater

1:30 PM – 5:30 PMExhibitor Move-Out

Exhibit Hall H

1:40 PM – 3:10 PM SESSION 6

Level 2, New Orleans Theater

3:10 PM – 3:25 PMRecognition Awards,

Closing Remarks, Gift Card Drawing

Level 2, New Orleans Theater

World’s largest subsea exhibition draws record crowds to The Big Easy

Delegates crowd registration at the 2015 Subsea Tieback Forum & Exhibition prior to the evening’s opening reception. Photo by Barchfield Photography.

Subsea Tieback Forum & ExhibitionDay TwoMarch 5, 2015New Orleans Ernest N. Morial Convention Center | New Orleans, LAwww.subseatiebackforum.com

Follow Us: www.offshoreoilevents.comOwned & Produced by: Presented by:

A key point of interest in every Subsea Tieback Forum & Exhibition is the technical presen-tations from operating company officials. Thursday’s sessions will include presentations on project learnings and asset integrity. These will include:

• Brian Ferrier, Chevron Energy Technology Company, who will speak on “Big Gas Subsea Sys-tems (The Rule of Thumb Applied to Oil Developments Should Not Be Applied to Big Gas)”

• Eric Chang, Shell, “Enablers For Robust Subsea Tieback Execution - Shell’s Europa A8”• John Fasser, ExxonMobil, “Standardized ExxonMobil Master Control Station”• John Lyons, ConocoPhillips, “Bayu Undan Phase 3 Wet Parking Subsea Trees”• David Moss, Shell Oil, “Safely Delivering Subsea Tiebacks in the Gulf Of Mexico”

jointly-held offshore leases in Keathley Canyon. Shell’s John Holloway concluded the plenary

session with a scene-setting presentation entitled, “Unlocking the next frontier of Shell deepwater opportunities.” With Shell coming off a strong 2014 in the deepwater sector, Hol-laway’s comments were also of keen interest to attendees. During last year alone, Shell brought deepwater projects onstream in the GoM (Cardamom and Mars B), Nigeria (Bonga North West), and Malaysia (Gumusut-Kakap), all of which combine to produce 370,000 boe/d from its global deepwater production. It is just one year out from bringing the deepest production facility in the world online: its wholly-owned and operated Stones project, which is located 320 km (200 mi) southwest of New Orleans in 2,900 m (9,500 ft) of water.

Officials from three operating companies spoke at the conference’s first session, “Project Learnings 1.” Hess Corp.’s Tor Gavem discussed “Tubular Bells – Managing Change.” Hess

bought an increased ownership stake and as well as the operatorship for the GoM deepwa-ter oil and gas field from BP in October 2010. Bryan Kung of Shell then discussed “Learnings from Shell Glider – Subsea Landscaping Tech-niques.” ExxonMobil’s Susan Dent closed the session with a presentation on HIPPS related to the GoM Julia project.

Session 2 on flowlines, risers and umbili-cals launched immediately following lunch with a presentation from Talos Energy’s David Hamilton which focused on “Phoenix Field Subsea Pigging.” The Phoenix field, located in the Green Canyon area of the GoM, began producing in May 2013. Danny Hough, of Deep Gulf Energy, gave a talk on the Kodiak subsea development flowline design. Kodiak, tied back to the Devil’s Tower truss spar, is located in the Mississippi Canyon area of the GoM.

Session 3, on subsea boosting and process-ing, closed the first day’s proceedings. Skipper

continued on page 3 ...

Hello, Subsea Tieback.From seabed mapping to decommissioning,

DOF Subsea works with your team to optimize

your subsea logistics in the Gulf of Mexico.

Subsea Solutions Engineered for You

In partnership with our clients, DOF Subsea adapts to your

specific project requirements to engineer and deliver what you

need, when you need it.

From front-end survey, engineering and management support, to

installation and IMR services, we have the vessels and specialist

teams to help you optimize subsea performance.

dofsubsea.com

Visit DOF Subsea at booth #1217.

Enter the raffle to win an Apple® Gift

Set valued at more than $900.

V

E

S

DOFSub_SSTBsgd2_150305.indd 1 2/17/15 10:06 AM

InterMoor has been busy in the GoM. Over the last year, the company has wrapped up contracts for three major developments.

Delta House FPSIn December 2014, InterMoor installed

and hooked up a permanent mooring system for the LLOG Bluewater-operated Delta House field floating production sys-tem safely, on time, without incident.

The full scope of the project was to design, fabricate, and install 12 suction pile anchors; to install 12 preset chain/polyes-ter mooring lines; and to hook up the FPS in 4,450 ft (1,372 m) of water in Missis-sippi Canyon block 254, 130 mi (209 km) southeast of New Orleans.

The company fabricated the suction piles at its 34-acre facility in Morgan City, Louisiana. The piles, which were used as permanent anchors for the project, are 85 ft (26 m) long and 16 ft (5 m) in diameter. Installation began in 2Q 2014 and was fol-lowed by the hook-up in 3Q.

One of the challenges of the deepwater installation was the use of a prescribed an-chor-handling vessel, the Joshua Chouest, on long-term charter to the LLOG drilling department. The prescribed vessel was procured early on in the design process, and Because the mooring system was pro-cured early on in the design process and had not previously handled mooring com-ponents of such size. It was necessary to find a solution that would use the selected vessel and extend the vessel capabilities.

The FPS is designed for a peak capac-ity of 100,00 b/d of oil and 240 MMcf/d

of gas. First production from the facility is expected in the first half of 2015.

Red Hawk In September 2014, InterMoor was con-

tracted for the decommissioning of Anadar-ko Petroleum Corp.’s Red Hawk spar. The project that represented a lot of industry firsts, and one that marked InterMoor’s first work in ballasting and deballasting.

Red Hawk spar is the deepest floating production platform yet decommissioned

in the Gulf of Mexico. It is also the first spar decommissioned in the Rigs-to-Reefs program, which required the spar to be laid down on its side on the seafloor.

Work was split between the original spar site at Garden Banks block 876 at a depth of 5,200 ft (1,584 m), and the reefing site at Eugene Island block 384 at a depth of 430 ft (131 m).

The Houston-based Acteon subsidiary developed the engineering procedures and performed the work to disconnect

the mooring lines from the floating facil-ity. The company also ballasted the hull prior to and during the topsides removal and deballasted it to prepare the hull for towing. Ballasting and deballasting were performed from a nearby derrick barge. The spar was then towed to the reefing site where it was flooded and laid on the seabed before InterMoor recovered the mooring lines and assisted with the as-laid survey of the reefing site.

Heidelberg Most recently, InterMoor recently closed

out its work on the Freeport-McMoRan Copper & Gold-operated Heidelberg proj-ect, located in Green Canyon 859.

The company completed and shipped the nine piles for flow line and riser hold-back from its Morgan City. Each pile was about 65 m long with a design weight of 139,234 lbs each (about 63 metric ton).

Intermoor completes GoM trifecta

Subsea Tieback Forum and Exhibition 2015 • www.subseatiebackforum.com • March 5, 2015 3

Record crowds... continued from page 1

Strong, of Endeavor Management, opened the session, presenting on best practices related to subsea decommissioning. Presenters from ExxonMobil closed out the day’s last session. Rina Batra spoke on “Qualification Learnings on the Julia Pump” to start the session and Jeffrey Barnhill ended the day with a presentation entitled, “MEGI Long Term Subsea Multiphase Pumping Performance.”

On the exhibit hall floor, Aker Solutions highlighted the new POWER Jump flow-line booster system, developed under the company’s Subsea Production Alliance it formed with Baker Hughes. The system is designed to make the boosting of individu-al wells and smaller fields more economically sustainable.

AlTiSS Technology spotlighted its subsea intervention riser, part of a lightweight riser concept, made of nonferrous alloys and specialty steels for corrosion and fatigue resistance in harsh environments.

Elsewhere, Delta SubSea provided delegates with information on its September charter of the HOS Bayou. The company outfitted the newbuild Jones Act-compliant multipurpose service vessel with its first ROVs: two Delta SubSea Schilling HD 150 HP work-class units. The vessel is currently at work in the GoM.

Harkand had information and renderings on hand on its newbuild DP3 dive sup-port vessel, Harkand Haldane, which is due to be completed Q2 2016.

Units from SAAB’s product line were on display at the exhibition. The company was also highlighting the Seaeye Sabertooth intelligent hybrid ROV/AUV, and its Sea-eye Leopard electric work class ROV, the latter of which features the company’s iCON intelligent control and power distribution system.

Visit PennWell’s booth #234 for more information on the company, its events, and its publications. PennWell Books can be found at booth #243.

Well intervention critical to brownfields says Infield Systems

Well intervention has become a critical feature of the future profitability of brownfield assets as operators seek to extend economic production for as long as possible, observes Infield Systems, and this is driving growth. The global intervention and workover market is set to increase from an estimated $9.97 billion to $17.48 billion in 2018.

In discussing the topic, Infield Systems’ Senior Advisor for Strategy Bent Mathisen said that the aging subsea infrastructure in the North Sea will require more intervention to carry out light works such as removing sand, scale, or wax precipitates as well as heavy duties such as re-drilling of side tracks and christmas tree change-out.

Another driver of the general growth is deepwater work, Mathisen said. As operators push into deeper environments, and/or look toward satellite wells and tiebacks there is a natural need for well intervention services.

The vessel demand for subsea well intervention is certainly a critical issue for the North Sea industry, he continued. Currently there is a mix of drilling units, LWI specific vessels and other DP vessels in use – however the increasing deepwater trend and the

need for lower cost options has developed some interesting patterns. Reduced rig demand resulting from the oil price decline has made them more price competitive with lighter service vessels while retaining an edge on capacity.

FES to supply bend stiffener connectors for deepwater Egina project

Saipem has awarded FES Inter-national a $2-million contract to supply bend stiffener connectors to Total’s Egina project offshore Nigeria.

The Egina project consists of five dynamic umbilicals and the bend stiffener connectors will con-nect them to the FPSO vessel.

FES International has started work on the contract which will be delivered by May 17. Egina is Total’s third deepwater offshore development in Nigeria. The field is currently under development and the production is scheduled to begin by the end of 2017.

Left: InterMoor installed and hooked up a permanent mooring system for the GoM’s Delta House project. Photos courtesy InterMoor. Right: InterMoor worked on the decommissioning of the Red Hawk spar. Pictured, fellow contractor Versabar removes the topsides with its underwa-ter heavy lift device, The Claw. Below: Piles for the Heidelberg project.

Piles for the Heidelberg project.

Helix’s LWI monohull vessel, Well Enhancer. Photo courtesy of Helix Energy Solutions Group.

An FES International employeeis shown working on the bend stiffener connectors for the Egina project. Photo courtesy FES International

Subsea capex share (%) by operator 2010-2019

Courtesy Infield Systems Ltd.

geoilandgas.com

Atlas™ Bottom Tendon Connector Make a stronger connectionFor more than 25 years, GE Oil & Gas has supplied reliable turnkey top and

bottom tendon connection solutions for Tension Leg Platforms. Continuing

in the tradition of innovation excellence, GE introduces the Atlas™ bottom

tendon connector (BTC).

The Atlas BTC is designed to meet the latest regulatory specifications and to

satisfy the ever-evolving needs of the offshore industry. Drawing extensively

on customer input and decades of in-field experience, the Atlas BTC features

a revolutionary and robust locking technology qualified up to 12 million lb

tension and 2 million lb compression through a rigorous, DNV.GL-witnessed

qualification program.

The Atlas BTC is forged for the harshest environments and refined for the

most strenuous fatigue applications. It installs easily with a reassuring

breech-style connection that cannot disconnect in any loading condition—

making the Atlas BTC the connector of choice for safety, strength, and

reliability in the industry.

Imagination at work

GenEleRev_SSTBsgd2_150305 1 2/18/15 10:24 AM

Subsea Tieback Forum and Exhibition 2015 • www.subseatiebackforum.com • March 5, 20154

GE Oil & Gas spotlights tendon connection system

GE Oil & Gas showcased its Atlas Bot-tom Tendon Connector (BTC), designed to complement the company’s existing Atlas Top Tendon Connector (TTC) on ten-sion leg platforms (TLP). The deep waters of the GoM are home to several of these TLPs, the most recent being Shell’s Olympus TLP, located in the Mars field.

Environmental factors such as the GoM’s soft, sandy sea floor and location in a hurricane-prone area often re-sult in stricter regulations for operators of these structures. Tendon connectors aim to keep the structure in place in the calm-est of waters or during a devastat-ing weather event like a hurricane.

To ensure this, Luke McElmurry, engineer, GE Oil & Gas, says that the product was designed to take compressive loads far beyond what a TLP should ever see. McElmurry said that the product was tested to 2 MM lbs of compressive load, which he says is 1 MM lbs over what experts said was necessary.

The GE Oil & Gas Atlas BTC’s locking technolo-gy has been qualified up to 12 MM-lb tension loads and 2 MM-lb compression loads through a DNV GL-witnessed program that included more than 25 installation and retrieval cycles, with these cycles taking place in and out of the water. Atlas BTC was designed for compliance with API recommended practice 2T.

According to McElmurry, one of the Atlas BTC key

features was how easy it was to install. He explained that the technician just drops it into the receptacle and Atlas BTC auto-matically locks in place. It self-aligns and

installs under its own weight. Three degrees of TTC/tendon misalign-

ment is permitted during in-stallation. For retrieval, there is just a single interface with an ROV, which actuates the retrieval tool, and then the connector can be pulled from the receptacle.

Its breech-style connec-tion does not disconnect in

a loading condition. It cannot accidentally disengage under

compressive loads under any cir-cumstances, McElmurry said. “We installed and retrieved from

the receptacle during testing dozens of times,” he said. “It is just as easy to retrieve as

it is to install. It can only be pulled from the receptacle intentionally.”

Additionally, each receptacle is interchangeable with each connector.

The Atlas TTC has a 16-year field service his-tory among GE Oil & Gas’ 25 years in connection solutions. When used with the Atlas BTC, it can be configured with an integrated tension monitoring system for real-time load data. It is designed for fatigue applications with a 10° rotational range of motion. The flexible element is isolated from the compression load path.

Visit GE Oil & Gas’ booth #1017 for more infor-mation on this and other GE Oil & Gas products.

Neptune Marine grouts riser support at Ichthys

Neptune Marine Ser-vices Ltd. has completed the structural grouting of the riser support structure at the Ichthys LNG Project offshore Australia.

Neptune completed the initial campaign of subsea grouting of the scour protection systems (SPS). The SPS were designed, fabricated, and in-stalled to the subsea structures prior to installation.

Neptune’s Subsea Stabi-lisation division did the work under contract to McDermott International Inc. for the INPEX-operated project.

McDermott is the main contractor for the subsea umbilicals, risers, and flowlines engineering, procurement, construction, and installation portion of the project.

Bourbon grows ROV fleet Bourbon has commis-

sioned three next-generation Heavy Duty Work (HD Work) ROVs from FMC Technologies Schilling Robotics. Capable of operating at depths of up to 3,000 m (9,842 ft), these HD Work ROVs will be fitted with manipulator arms, dynamic positioning, high-definition camera, sonar, and software. Additionally, the 150-hp units can carry up to 3,000 kg (6,614 lb) of special measurement or intervention tools. Bourbon says three more ROVs will be added to its fleet by the end of 2015.

The top of Ichthys LNG Project’s riser support structure tower, shown above the surface for the final time before being installed on the seabed. Photo courtesy INPEX.

Pictured is the HD Work ROV during field testing. Photo courtesy Mea-gan Douglas / FMC Technologies.

Subsea Tieback Forum and Exhibition Opening Day

geoilandgas.com

Atlas™ Bottom Tendon Connector Make a stronger connectionFor more than 25 years, GE Oil & Gas has supplied reliable turnkey top and

bottom tendon connection solutions for Tension Leg Platforms. Continuing

in the tradition of innovation excellence, GE introduces the Atlas™ bottom

tendon connector (BTC).

The Atlas BTC is designed to meet the latest regulatory specifications and to

satisfy the ever-evolving needs of the offshore industry. Drawing extensively

on customer input and decades of in-field experience, the Atlas BTC features

a revolutionary and robust locking technology qualified up to 12 million lb

tension and 2 million lb compression through a rigorous, DNV.GL-witnessed

qualification program.

The Atlas BTC is forged for the harshest environments and refined for the

most strenuous fatigue applications. It installs easily with a reassuring

breech-style connection that cannot disconnect in any loading condition—

making the Atlas BTC the connector of choice for safety, strength, and

reliability in the industry.

Imagination at work

GenEleRev_SSTBsgd2_150305 1 2/18/15 10:24 AM

Subsea Tieback Forum and Exhibition 2015 • www.subseatiebackforum.com • March 5, 2015 5

Subsea Tieback Forum and Exhibition Opening DayPhotos courtesy Tony Ruppe, Barchfield Photography

Subsea Tieback Forum and Exhibition 2015 • www.subseatiebackforum.com • March 5, 20156

Our integrated approach to delivering subsea solutions

enables our clients to move into challenging environments.

Installation of state-of-the-art subsea hardware

7,200 feet of water in the Gulf of Mexico

First oil achieved

Learn more at booth #523 www.mcdermott.com

Houston: (1) 281.870.5000 | [email protected]

© 2015 McDermott International, Inc. All rights reserved

Delivering Deepwater Solutions

McDerm_SSTBsgd2_150305.indd 1 2/17/15 10:00 AM

Industry gears up for new year filled with challenges, opportunities

John WestwoodDouglas-Westwood

We begin 2015 with the offshore industry facing difficult times – oversupply of oil leading to low oil prices; the chal-lenges to offshore from US onshore shale production; over-supply of some types of drilling rigs; high industry costs; the impact of Macondo, and others. But at the same time progress is being made on a number of fronts and for some players this could also be a period of great opportunity.

Challenging timesWe all need to remember, but often choose to forget,

that the oil business is highly cyclical. There have been seven significant price cycles since 1970 and also a few minor ones between times, so yet another should come as no surprise. The real surprise is that no one ever seems to build the probability into their business plan-ning!

The reasons for the fall in Brent crude prices from $115 in June to below $70 fol-lowing November’s OPEC meeting are well documented, as is the realization that Saudi Arabia is now defending market share, rather than a minimum price. That said, the nature of the oil and gas business in 2015 will be very different compared to that im-mediately after the 2008 financial crash.

Seventy percent of the additional oil pro-duction in recent years is unconventional. Much of this is from US shales and is not cheap oil, mostly needing prices of $60-80 to be commercially viable. What is more, well decline rates are rapid, and without ongoing drilling the current production capacity will be quickly eroded. By com-parison, most deepwater production needs about $80 oil.

Cutting costsIn the 13 years to the turn of the century, oil and gas

exploration and production expenditures grew by 48%; between 2000 and 2013, expenditure growth was 287% as the industry supply chain was unable to meet demand for products and services. However, the increase in oil and gas production was a mere 24%, a situation that was clearly unsustainable.

The ensuing cut-back in oil company spending served to focus attention on project capital cost reduction and here progress is being made. In April, Total, Europe’s third-largest oil company, cut the cost of its Kaombo project off Angola by about a fifth to $16 billion. Also great strides are being made in increasing the efficiency of drilling operations, which can form half the cost of many field developments. Baker Hughes, for example, has reported that by focusing on non-productive time, they saved some $10.4 million on a four-well project on the Terra Nova field offshore Newfoundland.

Rig oversupply For the past two years, we have been warning about the

potential for speculative building to result in oversupply in the mobile offshore rig market. The pattern is a familiar one across many sectors of the shipbuilding industry, from oil tankers to offshore vessels and rigs. As oil demand grows and prices increase, owners place orders – the first ones at low prices – but as yard capacity is taken up both build prices and delivery times increase. The early orders are delivered and owners sign contracts with the operators at lucrative day rates, but eventually deliveries exceed demand and day rates collapse – and as is presently the case – this sometimes coincides with an oil price downturn and inves-tors get burnt. Time passes and eventually low oil prices boost oil demand, oil prices increase, drilling capacity is absorbed and so the cycle begins again.

In the case of drillships, unprecedented investment and supply additions will create a difficult market for the next

five years. The current “order book to fleet ratio” is 61%. Of this, 44% is uncontracted!

New state-of-the-art rigs are needed to drill the deepwater presalt discoveries off Brazil and West Africa, and many units are coming onto the market. These will even-tually be able to win contracts; but with growing oversupply, the question is at what day rate; and will we now see old units long past their sell-by date being retired?

Long-term thinkingBig oil needs big projects and with the

Middle-Eastern NOCs dominating onshore production, deepwater remains one of the few places the IOCs can make major finds. Also, the largest offshore projects are not greatly influenced by today’s oil prices. Instead, planners project what prices will be in the decades ahead. Many expect

WE KNOW DEEPWATER

Visit us at booth 517oceaneering.com

Oceane_SSTBsgd2_150305 1 2/9/15 8:37 AM

Subsea Tieback Forum and Exhibition 2015 • www.subseatiebackforum.com • March 5, 2015 7

Statoil starts up Oseberg tieback offshore Norway

Production has started from the satellite Oseberg Delta 2 development in the Norwegian North Sea. Operator Statoil estimates the field’s recoverable reserves at 77 MMboe.

Oseberg Delta 2 is the tenth project in Statoil’s fasttrack portfolio. The partners sanc-tioned the development in December 2011 and received approval for the development plan from Norway’s parliament nearly two years later.

The accumulation is tied back to the Oseberg field center 14 km (8.7 mi) to the north via two subsea templates that can accommodate eight wells. Initial development involves three oil producers and two gas injectors.

Statoil says the cost – just under NOK 7 billion ($920 million) – is well below the esti-mate at the time the project was sanctioned. Oseberg Delta 2 is a further development on the Delta terrace where oil from two wells has been produced since 2008 from an existing subsea template.

Use of gas injection should lead to a substantially greater recovery rate, an official said.“There are also some good opportunities for the further development of the area and an

exploration well has already been planned in the southern part of the Delta terrace,” said Terje Gunnar Hauge, vice president for operations on Oseberg East.

Statoil’s partners are ConocoPhillips, Petoro, and Total.

oil prices to again average $100 in the medium-long term. Considering the lead times of large offshore projects, there is less potential to revise near-term devel-opment plans. As a result, capex tends to be less subject to short-term hits than onshore spends, such as US onshore drilling.

Yes, there will be significant spending cut-backs as higher-cost, more economi-cally marginal offshore projects are post-poned, and exploration spend will also be reduced if E&P companies decide to wait for rig rates to fall further. How-ever, it is likely that deepwater, despite its costs, is one area that will suffer less than others. So we feel confident about the long-term prospects for associated areas such as subsea production and floating production.

Another example of long-term thinking is FLNG – the scale of Shell’s investment in its huge Prelude project clearly shows this. Over the next five years we expect to see capital expenditure of $41 billion on such units and a further $21 billion on regasification vessels.

In total, we estimate that some $212 billion was spent on offshore E&P in 2013; and that 2014 spend will have been even higher, when the totals come in. Looking ahead, key spending sectors will be offshore drilling at 31%, subsea at 15%, and engineering/construction at 15%. The other major sector is “life of field” expenditure at 39%.

M&A opportunitiesAs evidenced with past cycles, the

present downturn could be a great buy-ing opportunity. In global E&P the NOCs rule and they will continue to invest; China has been the high spender and India’s ONGC now plans a huge $180 bil-lion foreign production acquisition spree. Likewise in oilfield services – acquisi-

tion opportunities are likely to present themselves for both strategic and private equity buyers, as was the case in the last downturn. Even without oil demand growth – which is extremely unlikely – vast numbers of new development wells will need drilling worldwide each year to counter natural production decline rates of typically 7-10% per annum for conven-tional wells and up to 60% for unconven-tionals such as in the US shale plays.

It’s likely that more than 80,000 de-velopment wells were drilled onshore in 2014 and some 2,500 offshore. Looking ahead, even greater numbers will be needed as present low oil prices begin to drive growing oil and gas consumption, boosting the demand for oilfield services. Furthermore, we believe that the annual total will need to grow to exceed 100,000 by 2020.

Over the past 30 years, growth in oil demand has been remarkably resilient to oil price changes – following the 2008 financial crises average annual oil prices fell by 37% in 2009, yet oil demand only fell 1% and was growing again in 2010.

Both high and low oil prices present opportunities for well-managed, well-fi-nanced companies that have a long-term view – the oil and gas industry is not a short-term game. But the window of M&A opportunity may well be very short before the next cycle begins. •

The author John Westwood is chairman of Doug-

las-Westwood, the international energy business research and consulting firm he founded in 1990. The firm recently com-pleted its 1,000th project. In addition to oil companies, contractors and financial organizations, Westwood has advised government agencies and presidential offices in six countries.

Statoil’s Oseberg Delta 2 satellite development is tied into the nearby Oseberg field center. Photo courtesy Harald Pettersen – Statoil.

Energy burns at the root of PennWell’s history. First printing our f agship publication — the Oil & Gas

Journal — in 1902, our petroleum division covers the topics, issues, challenges and solutions most

critical to the international petroleum industry. With a network of global events located throughout

the world, PennWell collectively reaches more than 135,000 petroleum professionals in 75 countries,

providing unparalleled reach of the international petroleum market.

International Conference on Petroleum Data Integration, Information and Data ManagementMay 19-21, 2015Houston, Texas USAwww.pnecconferences.com

POWER-GEN Natural GasAugust 18-20, 2015Columbus, Ohiowww.power-gennaturalgas.com

Pipeline WeekSeptember 15-17, 2015The Woodlands, Texas USAwww.pipelineweek.com

TM

Deep Offshore Technology InternationalConference & ExhibitionOctober 13-15, 2015The Woodlands, Texas USAwww.deepoffshoretechnology.com

Deepwater OperationsConference & ExhibitionNovember 3-5, 2015Galveston, Texas USAwww.deepwateroperations.com

Topsides, Platforms & HullsConference & ExhibitionFebruary 9-11, 2016Galveston, Texas USAwww.topsidesevent.com

Offshore West AfricaConference & ExhibitionMarch 22-24, 2016Lagos, Nigeriawww.offshorewestafrica.com

Subsea TiebackForum & ExhibitionMarch 22-24, 2016 San Antonio, TX USAwww.subseatiebackforum.com

GLOBAL PETROLEUM CALENDAR OF EVENTS

PetEveTb_Petro_150210 1 2/10/15 1:06 PM