NEWS - OFFSHORE UPDATEFloating ProductionOutlookSystem Orders BY JIM MCCAUL, IMAn EPC contract for a pro- more likely in the 3+ year time frame. tion doubled between 1980 and 2010 position to fracking, etc. But the shale/duction unit can easily ex- and has grown another 13% since. tight oil revolution will undoubtedly ceed $1 billion – and $3 Future Business Drivers Over the past decade global natural gas spread beyond the US. Opportunities A billion for an FPSO has re- The large number of projects at the consumption declined in only one year are too big to ignore. The EIA estimates cently been breached. Overall, this is a ready-to-go stage is clearly a positive – 2009 as a result of the ? nancial crisis. that shale/tight oil resources worldwide $20 to $30 billion annual market. But, indicator for future ? oating production The EIA sees world gas consump- total 345 billion barrels – and account as described below, the sector is hitting equipment orders. However, timing of tion growing at an annual rate of 1.7% for 10 percent of global oil reserves. some headwinds that could impact fu- the decision to proceed to contracting through 2040. ExxonMobil projects a The equally spectacular revolution in ture business opportunities. will be in? uenced by future underlying 65% increase in natural gas demand by shale/tight gas production is changing market conditions. Fundamentals driv- between 2010 and 2040. global gas supply and is threatening the Backlog of Planned Floater Projects ing future orders in the ? oating produc- dominance of major players in the LNG 243 ? oating production projects are tion market remain generally positive. Unconventional Oil & Gas Supply sector. And like shale/tight oil, the in various stages of planning as of be- World oil and gas demand continues to But unconventional oil and gas re- shale/tight gas revolution is centered in ginning May. Of these, 57% involve grow, crude pricing remains in the $100 sources are changing the supply land- North America. an FPSO, 16% another type oil/gas to $110 range and deepwater drillers scape. Use of horizontal drilling and Production of shale/tight gas in the production ? oater, 23% liquefaction or are operating at high utilization. But the hydraulic fracturing to exploit oil and US is projected to grow 52% over the regasi? cation ? oater and 5% storage/ sector is hitting competition from shale/ gas resources locked in shale, siltstone next decade. According to the EIA, of? oading ? oater. tight oil and gas supply, energy compa- and mudstone, as well as production of shale and tight gas is expected to pro-Brazil, Africa and SE Asia are the nies have been cutting capital spending oil from oil sands, has opened huge new vide 71% of US natural gas production major locations of ? oating production budgets and deepwater drillers are not sources of energy supply. in 2024, up from 61% today. In 2024 projects in the visible planning stage. quite as bullish as in recent past. Nowhere is the development of un- the US is expected to be producing 22.5 We are tracking 50 projects in Brazil, conventional oil resources more rap- TCF of natural gas from shale and tight 49 in Africa and 46 projects in SEA – Growing Demand for Oil and Gas idly advancing than in North America. rock formations – the equivalent of 60% of the visible planned ? oating pro- On the positive side, global oil de- Between 2011/2014 the production more than three times the current natu-duction projects worldwide. mand has grown at an average rate of of oil in the US and Canada increased ral gas production of Qatar. Around 25% of the projects are at an 1.4% annually over the past 20 years. 39%, primarily the result of incremen- A substantial, though yet unclear, por-advanced stage of development. They With the exception of two years dur- tal production of shale/tight oil in the tion of future U.S. gas production will typically have either entered the FEED ing the global ? nancial meltdown, oil US and oil sands resources in Canada. be exported as LNG. BP expects that phase, pre-quali? cation of ? oater con- demand has increased year over year As a result, production of oil in the US the U.S. “will become a net LNG ex-tractors has been initiated or bidding/ during this period. Growth in oil de- and Canada now accounts for 27.6% porter from 2016, reaching a total net negotiation is in progress. Award mand is widely expected to continue of non-OPEC oil production – up from LNG export volume of 11.2 Bcf/d by of the production ? oater contract in over the foreseeable future. The IEA, 22% in 2011. 2035.” ExxonMobil sees North Ameri-these projects is likely within the next for example, sees world oil demand in Development of shale/tight oil re- ca shifting “from a net importer to a net 2-3 years. The remaining 75% of the 2035 growing to 101 mb/d, an increase sources outside the US has been much exporter of natural gas by 2020 as pro-planned projects are in an early stage of 11% over today. Global natural gas slower due to land rights issues, access duction outpaces demand.” of development. Contract awards are demand is also growing. Gas consump- to drill equipment, environmental op- Like oil, development of shale/tight Annual Growth in Global Oil DemandProjected GrowthPlanned Projects Over Past Two Decades Type of Production Global Natural (% change year over year)System RequiredGas Demand(As of May 1, 2014)(Quadrillion Btu)Type of No. ofRequired ProjectsFPSO 138Other FPS 38FLNG 31FSRU 24FSO 12Total 2243Source: ExxonMobilSource: IEA12 Maritime Reporter & Engineering News • MAY 2014MR #5 (10-17).indd 12 MR #5 (10-17).indd 12 5/1/2014 10:18:10 AM5/1/2014 10:18:10 AM