A major challenge ahead for the offshore oil and gas industry will be figuring out how to fill the 50 million-b/d gap in liquids production that will be needed to match rising demand by 2040, IHS Energy Chief Upstream Strategist Bob Fryklund told attendees May 4 at the Offshore Technology Conference in Houston.
Industry is yet to find 30 million b/d of that total, and deepwater plays will serve a major role in bridging this supply-demand gap.
In the last 5 years, deepwater plays have been opened in 10 new basins resulting in world-class resources for Brazil, East Africa, the Barents Sea, Canada’s eastern coast, and Angola, Fryklund noted.
“The reaction to the current price cycle is not the same all over the world,” Fryklund said. “Offshore players have cut less” of their capital spending, he said, with international operators cutting the least.
The problem with bridging the long-term supply-demand gap lies in the math, Fryklund said, noting that between 2005 and 2014 industry only added 10.3 million b/d of liquids production. Operators are spending more money drilling roughly the same number of wells, but not added the needed volumes, he said.
Part of the problem, he said, is a natural phenomenon: where industry is looking for resource basins. Unlike the super basins found in the past with more than 50 billion bbl of oil, discoveries today are more like mini basins, with less than 10 billion bbl. Some examples he gave include Angola’s presalt play with 6 billion bbl and the Tehiti subbasin in the Gulf of Mexico with 3 billion bbl.
He said that the majors will likely be the strongest positioned to lead the future of deepwater exploration and development, although, he said, “Acreage collectors aren’t always the winners.”
He said field development times, once seemingly stuck in the 7-year range for quite a while, are falling to just 3 years, especially in North America.
Also, companies are pairing up in the services sector, he said, which will help with the cost side of things. “Alliances are probably ‘cooking up’ this week perhaps,” he speculated.
Given these potential cost savings, many looming questions remain unanswered, he said, including:
• Will activity pick up?
• Will deepwater exploration deliver more megaplays?
• Will cost and efficiency savings be permanent?
• What new models or alliances might help the cost paradigm?
• What game-changing technology will be developed for the deep water?
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