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demand in countries where oil prices are not fixed or subsidised. Supply is now well above demand. Meanwhile, gas supplies are also ample, although regional imbalances remain with some markets in Europe, North America and Asia, poorly connected to supply sources in Central Asia, the Middle East and North Africa. Major new gas projects, from being certain money earners, have suddenly become commercially risky. There have been severe repercussions in prices for offshore drilling services. In early 2008, high oil prices and a global shortage of drilling opportunities had ensured that even the most expensive offshore drilling projects went ahead. However, the costs to drill these wells have increased dramatically. In 2008, a typical shallow water exploratory well in the North Sea could cost over $30 million (mm); a price that had nearly doubled in a decade, whilst the growing number of expensive deepwater wells was making actual inflation in spending even greater. In 2009 we have across-the-board deflation in prices and delays in both shallow and deepwater projects. The question right now is; how long will this last? Historically, global economic recessions have led to declining energy demand, but the resultant lower prices have soon led to a recovery in demand and then prices, especially as OPEC has acted to rein in output to tighten supply. Thus in early 2009 the supply/demand balance for oil had already stabilised, despite the worsening recession. For the offshore drilling industry the numbers point to a return to stability in 2010 and, in 2011, a return to growth is forecast.
The Reports
served the rapid rise and fall of an upstream business and realised how the scarcity of low cost drilling prospects was influencing production and spending even then. He is now Chief Executive of Energyfiles where he has developed a detailed forecasting service. Energyfiles
works closely with Douglas-Westwood.
Douglas-Westwood
Established in 1990, Douglas-Westwood is an independent employee-owned company and the leading provider of business research & analysis, strategy
and commercial due diligence on the global energy services sectors. We have offices in Canterbury (England), Aberdeen (Scotland) and New York (USA) and to date have completed more than 550 projects for clients in over 50 countries.
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"The World Offshore Drilling Spend Forecast 2009-2013" and, soon to be published, "The World Offshore Oil and Gas Production and Spend Forecast 2009-2013" provide overviews of future prospects for offshore drilling, production and spends, quantitatively forecasting the world market by region and type of activity. The reports include essential information for decision-makers in oil companies, the contracting and supply industries, and government departments. For more information or to order a report visit www.dw-1.com/products email publications@dw-1.com or call +44 (0)1227 780999.
Energyfiles
Michael has spent over 25 years working in the oil and gas industry. His interest in energy and activity forecasting was stimulated over a decade ago whilst working in the Middle East. Here he obJune 2009 www.marinelink.com 45