Offshore oil and gas exploration spending will rise by more than 20 percent in 2023, according to oilfield technology company SLB.
SLB CEO Olivier Le Peuch said in a presentation at the J.P. Morgan Energy, Power & Renewables Conference offshore exploration “from shallow to deepwater, is experiencing a broad resurgence”.
“Offshore is experiencing a renaissance, with significant breadth and anticipated durability”, Le Peuch said, as quoted in a transcript on the SLB website. “Driven by the imperative of energy security, regionalization, and North American shale supply discipline, operators across the world are looking to hasten discovery to renew supply, accelerate development cycle times, and increase the productivity of their offshore assets.”
“Today, offshore is the fastest growing market globally driven by long-cycle developments,
production capacity expansions, the return of exploration and appraisal in brownfields, and new frontiers, and the criticality of gas as a long-term fuel for energy security”, Le Peuch continued.
SLB said there are currently over 400 active offshore rigs, predicting an increase in the “low to mid-teens” in 2023 and “further double-digit growth” in 2024.
The outlook beyond 2024 will continue to be strong, SLB noted. Between 2022 and 2025, the company projects more than $500 billion in global final investment decisions (FIDs) across over 30 countries, with more than $200 billion attributable to deepwater exploration. In total, the expected offshore investment in this period will see a 90 percent jump compared to the period of 2016 to 2019, the presentation said.
The resurgence in offshore is supported by infill and tie-back activity accelerating in mature basins such as in Africa; large oil and gas development projects being scaled up in Guyana, Brazil, and the Middle East; and return of exploration and appraisal, notably in new frontier offshore provinces such as Namibia, Tanzania, Colombia, India, and East Mediterranean, Le Peuch said.
SLB sees “a long tail of activity with 65 lease rounds concluding globally, in addition to several countries awarding leases through open door policies”, Le Peuch said.
Further, 348 subsea trees were awarded in 2022, the most since 2013, and there will be approximately 300 awarded in 2023, according to the presentation.
“Of the $500 billion in FIDs planned between 2022 to 2025, approximately 85 [percent] are viable at commodity prices below $50, decoupling them from short-term price volatility”, Le Peuch said. Over the last decade, advances in efficiency through technology and digital have resulted in lower costs and reduced cycle times in offshore developments, significantly improving project economics, he said. “This has resulted in lower break-evens and has given [exploration and production] operators the confidence to invest in these long-cycle projects.”
Further, as emission reduction priorities begin to impact investment decisions in the upstream landscape globally, the lower carbon intensity of offshore operations will continue to add to its value proposition, Le Peuch noted.
“We are excited about how these market dynamics are already impacting our business”, Le Peuch concluded. “Offshore represents approximately 50% of our international revenue, and it is primed to grow as we have visibility into a substantial baseload of offshore activity that will outlast near-term demand volatility and reinforce the durability of the cycle.”
Houston-based SLB, which houses the legacy Schlumberger brand, targets energy innovation and has locations in more than 100 countries, according to the company website. In the first quarter of 2023, the company reported net income attributable to SLB of $934 million, an increase of 83 percent year over year, and revenue of $7.7 billion in the same period, an increase of 30 percent year over year.
To contact the author, email rteodoro.editor@outlook.com
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