Offshore Oil Production Is Experiencing a New Investment Boom
The global market for equipment for underwater oil production will grow by an average of 10% per year in the period from 2024 to 2027, according to the medium-term forecast of Rystad Energy. The volume of investments in this segment will increase over this period from $32 billion to $42 billion per year (against $23 billion in 2021).
Slightly more than a third of the investments will be in ultra-deepwater projects (1.5 km or more), which are implemented using floating installations for oil production, storage and shipment (FPSO). Such installations are used, in particular, at the Stabroek block, where the phased commissioning of three FPSOs (Liza Destiny, Liza Unity and Prosperity) made it possible to increase oil production from zero to 610 thousand barrels per day in less than five years. The volume of supply in the second half of the 2020s will exceed the mark of 1 million barrels per day, including through the introduction of new FPSOs at the Yellowtail, Tilapia and Redtail fields. New projects will also be implemented offshore Brazil, where floating installations will be used to produce at such greenfields as Buzios VIII, Buzios IX, Sepia and Atapu. Large-scale investments will also affect existing ultra-deepwater projects such as Trion in Mexico, Egina in Nigeria and Argos in the USA.
About 45% of investments in the period from 2024 to 2027 will be in deep-water projects (from 125 m to 1.5 km). New (Johan Castberg, Breidablikk) and existing (Balder Future, Gullfaks South, Schiehallion) projects in the North Sea, which remains the main hydrocarbon production region for Norway and the UK, will play a key role. If oil production in Norway exceeded the docked level by more than 10% last year (2.02 million barrels per day versus 1.77 million barrels per day in 2019), then in the UK it decreased by more than 35% during this period (from 1.12 million barrels per day to 715 thousand barrels per day, according to the Energy Institute). Investments in offshore oil production can reduce the UK‘s dependence on oil imports.
A new market segment may be the injection of carbon dioxide into spent offshore oil fields. After injection, carbon dioxide will gradually dissolve in the reservoir fluid, as a result, CO2 will move into a “bound“ state. One of these projects will be implemented in Indonesia, where local Pertamina and Japanese Mitsui will use the Duri and Minas oil fields for CO2 burial, production of which began back in the 1950s. Another project will be the construction of an underwater reservoir in the Gulf of Mexico, where carbon dioxide from Texas refineries and petrochemical plants will be buried.
In general, offshore oil production is experiencing a new investment boom. The previous period of capital investment growth ended in the mid–2010s, when a number of projects were suspended due to falling oil prices: if in 2010-2014 the average price of Brent was $ 102 per barrel, then in 2015-2019 it was $ 57 per barrel, according to experts from the Global Energy Association. The new boom in investments is associated, among other things, with cheaper production: if in 2014 the operating costs in the fields of the Brazilian shelf averaged $ 70 per barrel, then in 2022. – $35 per barrel, according to the Energy Information Administration (EIA).
