PROJECT AND MARKET TRENDS
Oil and Gas Supply Chain Awards Hit a 16-Year Low
Supply chain companies have seen their profits squeezed since the E&P cost cuts of the previous downturn, and just as the industry could finally hope for better days, the COVID-19 pandemic caused the value of 2020’s awarded contracts to slump to a 16-year low of $446 billion.
Remote Survey: A New Normal for Oil and Gas
On the normally unmanned Valhall Flank West platform, the survey of a 1-year-old box boom pedestal crane featured auto-testing of the automatic overload protection system. A similar inspection program was performed on two knuckle boom cranes on a FPSO vessel in Skarv.
Permian Water Disposal Surges to Record High
The last growing market of US land services, water disposal, is set for an all-time high in the Permian.
Rystad Sees Global E&P Players Investing $380 Billion in 2021, Says About 20% Is at Risk
Of the total $380 billion of projected investments, about 60% ($234 billion) is likely to come from producing assets, which have two main spending channels: facility and well capital expenditures.
Lifetime Revenue vs. Construction Cost—a Metric for Assessing Drillship Retirements
Through the end of October, 38 rigs have been retired this year. Predicting future rig attrition is not an exact science, but certain metrics help identify those rigs.
One Quarter of the Global Floater Fleet Could Be Scrapped as COVID-19 Accelerates Restructuring
The number of units that have been cold stacked since 2016 are in the double digits. Reactivation costs for these rigs range from $40 million to $100 million. Given current rates and contract durations, most of these are unlikely to return to work.
Oil-Production Costs Reach New Lows, Making Deepwater One of the Cheapest Sources of Novel Supply
In an updated projection, Rystad said that a breakeven of only $50/bbl is needed to produce 100 million BOPD in 2025, reflecting the reduction in oil-production costs.
New LNG Projects – All Dressed Up and No Place To Go
Wood Mackenzie is bullish on the future of global LNG demand. Chief Analyst Simon Flowers outlines the risks ranging from spot prices, project economics, and environmental concerns.
North Sea Decommissioning Costs Estimated as Double Those in SE Asia
Rystad Energy compared the decommissioning costs based on two similar steel platforms, one in each region, using its cost-estimating tool.
Another 150 North American E&Ps May Require Chapter 11 Protection Through 2022
Several E&P and OFS companies have already filed for Chapter 11, but unless prices strengthen the total number of filings could be as high as 190 by 2022.
COVID-19 Pushes OFS Headcount to Lowest Level in Over a Decade, Revenue Per Employee Set to Decline
Among the top 50 oilfield service firms, downsizing is estimated to land at a headcount of 610,000, down from the 760,000 maintained after the 2016 downturn.
Energy Transition Projects Could Replace Up to 40% of OFS Upstream Revenue
Around $90 billion, or 40% of the revenue from the top 50 players in the global service market, could potentially be replaced by energy transition projects, such as clean energy infrastructure and renewable energy production development services.
Are Gas Pipelines Really Impossible To Build?
The growing opposition in the US for new natural gas pipelines comes as supply and demand continue to grow. Pipelines are necessary for the transport of the gas. Why is there a disconnect between the two?
A Single FPSO Award Forecast in 2020
Awards are expected to recover to seven vessels next year. Over the past 10 years, only 2016 saw a lower level of activity when not a single FPSO contract was awarded.
Opportunity Shaping for Renewable Energy Projects: Selecting the Right Investments in a Competitive Environment
For successful development and execution, renewables—as with other capital projects —require diligent opportunity shaping. Five key steps for shaping renewable energy projects are discussed.
As Major Offshore Projects Are Pushed Out, Gloomy Year Ahead for the Subsea Market
While a year with less than 200 subsea tree awards seems uncommon, a year with less than 100 awards is an even rarer sight. It has only happened once before since the turn of the century, in 2016 following the oil price crash of 2014–2016.
OFS Companies’ Stock Price, EBITA Margins Hit Hard From COVID-19 Fallout
Two intelligence groups share similar views on how the fallout from the COVID-19 pandemic has impacted OFS companies’ valuations and operations.
FPSOs May Need To Be Shut Down During Economic Downturn
FPSO sanctioning is at a minimum and few opportunities remain for FPSO suppliers to find new work and redeploy their vessels. Suppliers may be forced to accept day rate reductions in order to keep their vessels working.
Greenfield E&P Tenders Are Set To Shrink to $60 Billion in 2020, a 2-Decade Low
Rystad Energy's analysis shows the decline is in contrast to $170 billion worth of tenders awarded in 2019. Tender activity is expected to show marginal recovery in 2021, reaching about $74 billion.
Current Challenges for the UK and Norway in the Face of COVID-19
Westwood Global Energy’s analysis looks at production, cost, and revenue estimates in the UK and Norway, should oil prices remain low. The research group also provided an outlook on drilling activity.
Oil and Gas in the Perfect Storm
The market in 2020 will be oversupplied by 3–5 million B/D and global inventory will surpass 400 million bbls over the next few months, according to ADI Analytics.
How Will Asia Pacific's Upstream Sector Respond to the Oil Price Crash?
Unprecedented, perfect storm, a black swan event—all ways of describing the situation the oil and gas sector finds itself in right now. Here’s an analysis on the near-term outlook for projects in Asia Pacific.
Indonesia’s 2020 Oil and Gas Output Likely To Fall, Despite Official Forecasts for Growth
Indonesia’s production of both oil and gas will most likely fall in 2020, a Rystad Energy analysis shows, despite the country’s official projections of a combined 8% growth year-on-year.
Coronavirus Set To Slash Chinese LNG Demand but US LNG Tariff Lift Could Save the Day
The unseasonably warm weather in the northern hemisphere and the rise of the global supply levels has resulted in record-low LNG prices. Adding to that, the coronavirus epidemic in China has reduced business and industrial activity, with January’s LNG imports dropping by about 10% year on year.
Take 10: Oil & Gas, Energy, and Chemicals in 2020
What will 2020 look like for the oil and gas, energy, and petrochemical markets? Here are 10 observations from ADI Analytics that demonstrate just how global and complex the energy mix has become.
A New Offshore Investment Cycle Is in the Making
The amount of oil and gas resources approved for development last year surpassed 20 billion BOE, the highest level seen since 2011. Telltale signs have emerged that we are entering a new offshore investment cycle.
UK Leads Global Drop in Operational Production Costs
Global OPEX is falling, and the UK has emerged as a cost-cutting powerhouse among global offshore regions feeling the squeeze of uncertain oil prices. In pursuit of lower unit prices, Rystad Energy says that operators and contractors have begun nurturing operational improvements.
Water Desalination Applications in Shale-Gas and Polymer EOR Produced Waters
Oil and gas extraction using water has opened up new hydrocarbon resources. However they can produce four times more salty water byproduct than oil. Desalination in shale gas and polymer-flood EOR remain niche markets for lowering cost and improving production.
Offshore OFS Market Poised for Massive Boost in Southeast Asia
A fresh wave of offshore project sanctions across Southeast Asia could boost greenfield investments in the oilfield service space by almost 70% in 2020. The growth will be driven by a handful of new megaprojects across Malaysia, Myanmar, and Vietnam, according to recent project commitments.
The Dawn of the Disruptive, Deepwater TCP Riser
Nonmetallic, thermoplastic composite pipe (TCP) technology can now be found in every oil and gas region globally and can operate at pressures of up to 12,500 psi, and in water depths as low as 3000 m. The focus is now on developing and deploying TCP risers for extreme environments.
Leverage Risk-Based Inspection and Risk Assessment for Improved Profitability
Risk-based inspection is based on sophisticated risk analysis which significantly decreases overheads and helps to avoid equipment failures or unnecessary shutdowns.
Oil Price Spike Could Send Service Company Margins Higher
The recent jump in oil price could create additional momentum for margins in the service sector. With shale euphoria wearing off, service company margins are still showing some resiliance. If the price hike persists into 4Q 2019, increased activity could improve pricing further.
Operating Excellence Through Benchmarking in Upstream Operations
As companies have focused on giant capital investments onshore and offshore to drive growth, they have often focused less on field operations, especially OPEX. This represents an enormous opportunity to address profit squeeze by improving overall cost efficiency in oil and gas projects.
Subsea Markets Face High Stakes if Oil Prices Slide
In a $60 to $70 oil environment, the subsea market is poised to grow around 7% annually up to 2025. But a significant portion of this activity is at risk if the price of Brent crude falls to $50 per barrel.
Price and Cost Risks Drive Race To Secure FID, FEED, and Contractors for Global LNG
Approximately $200 billion in projects worldwide are racing to be approved over the next 2 years. The race is not just to make FIDs on projects, but also to enter FEED work to lock in contractors before others do.
Africa Takes the Lead in Record Year for LNG
Driven by Mozambique’s Area 1 and Area 4 projects, Africa is poised to become the dominant LNG investment destination by the end of this year, with the continent seeing nearly one-third of total greenfield investment.
The Opportunity and Threat Posed by US Shale Water
The well count and completion intensity of US tight oil and gas operations have grown in recent years, and rising pressure from environmental regulations means that produced water management has become a key focus for operators.
Service Companies Show Pricing Power Growth
New analysis from Rystad Energy shows service companies are beginning to raise prices after seeing a significant drop following the oil price downturn. Pricing power is projected to keep rising in 2020 as the service industry sees more demand across the supply chain.
Weld Overlay Joins the Party as Corrosion-Resistant Pipe Undercapacity Threatens Project Scheduling
It is rare that businesses selling equipment to the oil and gas sector can benefit from lower oil prices. But that is the case for CRA pipe manufacturers, which are comfortably outperforming 2014 levels.
US Exceeds One-Year Mark as Natural Gas Exporter
An EIA report shows natural gas exports reaching 4.6 Bcf/D in February, the 13th consecutive month in which the country's natural gas exports exceeded its imports. Exports are projected to reach 7.5 Bcf/D by 2020.
Successful D&A Means Seeing the Unseen
Decommissioning and abandonment comes with its share of unexpected surprises, but many of those surprises could be avoided merely through better planning and care.
D&A: The Asia-Pacific Offshore Industry’s Next Big Challenge
The next big wave of decommissioning and abandonment projects is set to occur in the Asia-Pacific region, and APAC’s operators are now tasked with finding cost- and time-effective ways of unwinding their huge agglomeration of wells and facilities.
UK Offshore’s Big Challenge: Growing While Plugging More Wells Than They Drill
The outlook in the UK is a case study of the squeeze facing E&P in other basins where operators are trying to pay to sustain production with discoveries, while plugging and abandoning old wells, all paid for by the lean cash flow due to low oil prices.
Subsea is Back in Black
From its record high in 2014, purchases of subsea equipment and SURF fell around 50% until reaching a low in 2018. New data suggest that the subsea market will be a top-performing oilfield service segment.
Are Deepwater Projects Due for a Revival?
The oil price downturn spawned a lull in deepwater enthusiasm, but better project execution and reduced project lead times have helped operators achieve lower costs and better returns. What does the landscape for deep water look like in the near term? Will operators get more involved?
Subsea Production Systems—Will 2019 Be a Tipping Point?
The past year ended with a surge of subsea tree awards as E&P operators locked in lower supply-chain cost. Will demand continue to grow in 2019 and allow subsea OEMs to build backlogs and take back pricing power?
Take 10—Are You Ready for 2019?
Cautious optimism is in the air across the oil and gas landscape as oil prices have risen back into the mid-$50s in the past month. Here are some oil and gas industry themes to think about as you head into 2019.
To Sanction, or Not To Sanction—That is the Offshore Question
2019’s class of offshore projects show a wide range of potential sanctioning outcomes.
Dawn of the Drone: A New Method for Delivering IRM Services Subsea
Subsea inspection/repair/maintenance services have traditionally relied on vessel-based, ROV, or diver operations. In the longer term, identifying significant incremental savings in these operations is not sustainable and an innovative approach deploying digital technologies is being investigated.
Sustained Subsea Hardware Investment Projected for Near Term
Westwood forecasts a recovery in the subsea market backed by a new wave of offshore investment. Subsea vessel operations and hardware expenditure are expected to total $152 billion from 2019 to 2023.
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