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Winds of Change - Offshore Oil & Gas

NAMEPA & NOIA. Winds of Change - Offshore Oil & Gas. Oceans of Oil & Gas James K. Wicklund, Research. We have LOTS of Oil & Gas Offshore. Offshore accounts for 33% of production, 7% comes from deepwater Deepwater has grown from 6% in 2010 and expected at 9% by 2020

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Winds of Change - Offshore Oil & Gas

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  1. NAMEPA & NOIA

    Winds of Change - Offshore Oil & Gas

    Oceans of Oil & Gas James K. Wicklund, Research
  2. We have LOTS of Oil & Gas Offshore Offshore accounts for 33% of production, 7% comes from deepwater Deepwater has grown from 6% in 2010 and expected at 9% by 2020 7% of the world’s oil resources, ~330 bnBoe, are in the deep offshore 481 Deepwater discoveries between 2007 and 2012 Deepwater is 50% of all conventional new reserves Deepwater discovery sizes reached 230 million Boe with the US at a historical 20 mllionBoe average. Only 38% of discovered deepwater reserves are currently producing
  3. Progression of Technology into the Depths Borrowed from FMC Technologies, this demonstrates the progression of the industry’s technology in attacking water-depth and pressures Source: FMC Technology
  4. We are Very Good at Finding Oil & Gas
  5. Impressive Chart But Scales is an Issue Production has ramped up over the last 14 years but is still only 7% of total oil production Source: EIA
  6. We are Already “Over-Producing” in the Gulf of Mexico Source: EIA
  7. Where (?) Points to Our First Issue Source: IHS
  8. Not All Things Go Up Forever Deepwater has its challenges Rig dayrates appear at near-term peaks 3rd & 4th Generation rigs will start getting stacked 50 floaters could be stacked in the next 4-5 years Discoveries are being delayed and deferred Mad Dog II current plan doesn’t meet BP return targets Total cuts $1billion of deepwater budgets, costs too high Construction backlogs are getting pushed back FPSO expectations are too high Deepwater is now the highest cost production along with oil sands Capital is likely to be shifted to more economic regions Competition for capital will increase
  9. Brazil is Too Critical to Growth to Ignore Brazil rig count is likely to decline before it goes back up ~40% of tree installations 2014-2017 are expected there The capital shift going on in Brazil changes the focus World Cup, the Olympics and falling oil production Brazil deepwatercapexis expected to represent one-third of total capex among the top six deepwateroperators during 2011-2015 and 22% of total industry deepwatercapex
  10. Barking Up the Wrong Tree The Production recovery in the US has dwarfed, in acceleration and volume, the increase Federal waters in the GOM Source: Jean Laherrere
  11. Capex Has Spiked Higher but the Slope is in Question That last spike up may very well have the crest of the wave hidden somewhere within LEGAL ENTITY, department or author (Click Insert | Header & Footer)
  12. DeepwaterCapex Shows Deceleration - Quest Source: Quest Offshore
  13. Market Expectations on FPSOs are Too High This Year Source: SBM Offshore
  14. US Significance Has Been Declining Since 2003 Source: EIA
  15. The Challenges to the Offshore & Deepwater Can be Met Offshore projects must meet company return expectations/hurdles Feed studies will be re-commissioned to lower costs Just because we can find it, doesn’t mean we can develop it under the current cost and price environment Complacency in “the way we’ve always done it” will no longer work More collaborative efforts from all interesting parties is required Technology remains critical but it has to be affordable and effective at lowering the costs and improving the returns Just because there is jewelry in the store, doesn’t mean my wife has the money There is a lot of oil in the deepwater but the approach has to shift
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