A new report from analysts Douglas-Westwood contends that over $225 billion will be spent on offshore wind power over the next four years.
Over $335 billion worth of expenditure is expected over the next five years on offshore operations & maintenance according to a new report, The World Offshore Operations & Maintenance Market Forecast 2012-2016, by Douglas- Westwood.
Report author Jenny Harbour commented, “In 2011 demand for offshore operations & maintenance services totaled $52.5 billion, having grown at a compound rate of 6.3% over the past five years. Over the next five years we expect a greater compound growth of 8%, as the market recovers from the effects of the global downturn of 2008-2009. This will be driven by a combination of high oil prices, buoyant offshore development activity and rampant price inflation for equipment and services.
“O&M markets are considerably less vulnerable to downturn than their capital-led counterparts. Whilst global offshore drilling activity dropped by an estimated 14% during 2008-2009, total offshore production (the principal driver for all operational activity) grew by 1%. The global offshore O&M market dropped, over the same period, but only by 0.04%, despite widespread price deflation for equipment and services.
“Production services dominate O&M market expenditure. Over the 2007-2011 period, demand for production-related services accounted for 44% of global O&M demand. These services are directly associated with production levels from offshore facilities and are intensified as an oil or gas reservoir matures and requires additional effort to sustain production. The inevitable maturing of offshore fields will drive compound growth of 7.4% in the production services sector as operators struggle to come to terms with decreasing down-hole pressure and increasing water cuts.
Douglas-Westwoods Research Manager, Rod Westwood , concluded, “The Historical dominance of mature western basins is to be challenged in the next five years. From 2007 to 2011, 40% of global demand was accounted for by Western Europe and North America. Although Douglas-Westwood expects market growth in all regions (despite the UK and RoWE regions facing terminal production decline) their share of global demand over the forecast period is expected to drop to 34%. This shift will be driven by a combination of increasing offshore production in regions such as the Middle East and the movement towards deepwater in less mature regions such as Africa and Latin America.
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Offshore WIND staff, March 23, 2012; Image: alphaventus