World Subsea Hardware Market Forecast 2015-2019

World Subsea Hardware Market Forecast 2015-2019energy business insight

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Subsea Hardware Spend To Remain High, Due to Order BacklogDouglas-Westwood (DW) forecasts global subsea hardware Capex will total $145 billion (bn) between 2015 and 2019. This represents growth of more than 27% compared with the preceding five-year period. The 350 subsea tree installations in 2014 represent the highest volume of installed units on record, a trend expected to continue until 2018 when lower orders in the current commercial environment will drive a decline in trees installed for that year.

The crude oil price decline, apparent since June 2014, presents a major challenge for operators of subsea developments. Subsea projects are typically among the most capital intensive and technologically challenging in the industry. As operators (and their investors) have increased focus on cash flow, the higher upfront costs associated with these projects have left them vulnerable to deferrals and cancellations. Tree orders in 2014 totalled 233, the lowest volume for a decade.

Despite these near-term concerns, the long-term fundamentals of the subsea hardware industry are strong and represent a growth story as they benefit from continued hydrocar-bon demand growth, declining conventional reserves and technological improvements. Over the next five years, development activity in the established deepwater provinces, coupled with the start of field development in frontier areas, such as the Eastern Mediterranean and East Africa, will support expenditure.

Subsea hardware spend will be the highest in Africa, Asia and Latin America, with the three re-gions combining to form almost half of the global total. Expenditure continues trending towards deeper waters with around 42% of total spend in the next five years targeting projects in water depths greater than 1,000 metres.

Subsea production equipment, SURF and pipe-lines each attract approximately one third of all expenditure by component, with higher capacity and capability equipment a theme throughout the sector. The development of remote fields, the addition of new project phases and the tie-back of satellite fields into subsea hubs continue to sup-port SURF expenditure over the forecast period.

The World Subsea Hardware Market Forecast 2015-2019 details specific subsea hardware trends by region and component supported by analysis, insight and industry consultation, and includes:• Drivers & indicators – a discussion of fac-

tors influencing subsea hardware installa-tion activity including oil & gas prices and deepwater production to offset declining production from onshore and shallow water basins.

• Supply chain analysis – detailing the key players within the subsea hardware market and analysis of top manufacturers’ subsea orders and backlog.

• Regional & component forecasts – by region, noting key projects & operators and by subsea production hardware (trees, controls, templates & manifolds, flying leads, jumpers), SURF and trunklines Capex and units/km installed. Each regional forecast is broken down by water depth category.

World Subsea Hardware Market Forecast 2015-2019energy business insight

e: [email protected] t: +44 (0)203 4799 505


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Why purchase the World Subsea Hardware Market Forecast?DW’s market forecasting is trusted by sector players worldwide, with clients including the world’s top-10 oil & gas companies, top-10 oilfield services companies and top-10 private equity firms.

The report is relevant to strategy teams within subsea manufacturing, subsea services, drilling operations and offshore construction compa-nies as well as financial institutions.

Our proven approach includes:

• Unique and proprietary data – updated year-round from published sources and insight gained from industry consultation.

• Detailed methodology – based on a thorough scrutiny of data which enables forecasts to be established on a project-by-project basis, taking into account factors such as project size, location, progress to date, operator workload, etc. DW takes a conservative view of the prospects for the subsea sector, to reflect the delays and schedule overruns that are fairly common in the industry.

• Comprehensive market forecasts – ex-amination, analysis and 10-year coverage of expenditure by region, depth and hardware type: subsea production hardware, SURF and trunklines.

• Concise report layout – consistent with DW’s commitment to delivering value for our clients, all our market forecasts have a

concise layout consisting of industry back-ground and supporting materials condensed to enable quick review with ‘speed-read’ summaries of key points throughout.

More about Douglas-Westwood’s capabilities in the subsea sectorDW’s research team monitors and analyses every aspect of the global subsea market from design engineering, seabed equipment procure-ment, construction & installation, to inspection repair & maintenance (IRM). Through our commissioned research we assist engineer-ing houses, Oilfield equipment manufacturers, E&P operators and installation contractors in determining market dynamics, and assessing the supply and demand for subsea equipment and associated services on regional and country-specific basis. Our clients include major subsea equipment manufacturers, subsea engineering houses, ROV & diving contractors and E&P operators.

ISBN 978-1-910045-14-5

"A very useful report.... we trust Douglas-Westwood"

- Subsea Equipment Manufacturer

"Excellent regional market information"

- Oilfield Services Company

2015

World Subsea Hardware Market Forecast

Prospects, Technologies, World Markets

2015-2019

© 2015 Douglas-Westwood 2World Subsea Hardware Market Forecast 2015-2019By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood

Contents

Table of Contents

1 Summary & Conclusions ..........................................7Summary ......................................................................................................................................... 8

Conclusions .................................................................................................................................... 9

2 Drivers & Indicators .............................................. 10Population & GDP Growth Drive Energy Demand ............................................................. 11

Offshore Oil & Gas..................................................................................................................... 12

Oil – Supply & Demand ............................................................................................................. 13

Natural Gas .................................................................................................................................. 14

Oil & Gas Challenges ................................................................................................................. 15

Impact of Oil Prices on Companies ........................................................................................ 16

Importance of Brazil to the Subsea Market ........................................................................... 17

Deepwater Focus Areas ............................................................................................................ 18

3 Subsea Development ............................................. 19Why Subsea? ................................................................................................................................ 20

Offshore Production Options .................................................................................................. 22

Subsea Production Hardware ................................................................................................... 23

SURF and Pipelines ..................................................................................................................... 24

4 Supply Chain ............................................................ 25The Subsea Equipment Supply Chain ...................................................................................... 26

Subsea Production, SURF and Pipeline Competitive Landscape ........................................ 27

Subsea Tree Market Trends ....................................................................................................... 28

5 Subsea Hardware Market Forecast .................... 29Methodology: DW Forecasting Process ................................................................................. 30

Methodology: Expenditure Forecasts ..................................................................................... 31

Methodology: Market Modelling .............................................................................................. 32

Hardware Assumptions ............................................................................................................. 33

The World Subsea Hardware Market – Regional Analysis ................................................ 34

The World Subsea Hardware Market – Component Analysis .......................................... 35

The World Subsea Hardware Market – Water Depth and Units ..................................... 36

Africa – Capex ............................................................................................................................. 37

Africa – Units ............................................................................................................................... 38

Asia – Capex ................................................................................................................................ 39

Asia – Units .................................................................................................................................. 40

Australasia – Capex .................................................................................................................... 41

Australasia – Units ...................................................................................................................... 42

Eastern Europe & FSU – Capex ............................................................................................... 43

Eastern Europe & FSU – Units ................................................................................................. 44

Latin America – Capex .............................................................................................................. 45

Latin America – Units ................................................................................................................ 46

Middle East – Capex ................................................................................................................... 47

Middle East – Units ..................................................................................................................... 48

North America – Capex ............................................................................................................ 49

North America – Units .............................................................................................................. 50

Norway – Capex ......................................................................................................................... 51

Norway – Units ........................................................................................................................... 52

Rest of Western Europe – Capex ........................................................................................... 53

Rest of Western Europe – Units ............................................................................................. 54

United Kingdom – Capex .......................................................................................................... 55

United Kingdom – Units ............................................................................................................ 56

6 Appendix .................................................................. 57Data and Text Conventions ...................................................................................................... 58


Contents

Figures

Figure 1: Global Subsea Capex by Component 2010-2019 ....................................................................8

Figure 2: Global Population Growth & Energy Demand, 1965-2014 ............................................... 11

Figure 3: Historic Primary Energy Demand by Region, 1965-2012 ................................................... 11

Figure 4: Offshore Oil & Gas production Surface and Subsea 2000-2020 .................................... 12

Figure 5: Global Deepwater Capex by Region 2010-2019 ................................................................... 12

Figure 6: Oil Price & Demand ............................................................................................................................... 13

Figure 7: World Liquids Production Growth, 2005-2014 ....................................................................... 13

Figure 8: Levellised Cost of Energy ($/mwh) ................................................................................................ 14

Figure 9: Natural Gas Prices ($mbtu) ................................................................................................................ 14

Figure 10: Oil & Gas Production versus E&P Spend.................................................................................. 15

Figure 11: Skilled Workers Age Category ..................................................................................................... 15

Figure 12: Indexed Impact of Price Decline on Energy Sectors Jul 14 to Jan 15 ........................ 16

Figure 13: Brazillian Offshore Basins................................................................................................................... 17

Figure 14: Deepwater Focus Areas .................................................................................................................... 18

Figure 15: Borghom Dolphin Facility, North Sea ........................................................................................ 20

Figure 16: Perdido platform in Gulf of Mexico ........................................................................................... 20

Figure 17: Subsea Processing in Greater Gorgon off of Australia ..................................................... 20

Figure 18: Subsea Flow Meter ............................................................................................................................. 21

Figure 19: Subsea Hardware Supply Chain..................................................................................................... 26

Figure 20: Visible Subsea Production Hardware Orders ......................................................................... 28

Figure 21: Visible Subsea Production and Processing System Backlog ............................................. 28

Figure 22: DW Case – Subsea Tree Installations by Category ............................................................. 31

Figure 23: Global – Subsea Capex by Region, 2010-2019 ..................................................................... 34

Figure 24: Global – Subsea Capex by Component, 2010-2019 ......................................................... 35

Figure 25: Global – Subsea Capex by Water Depth, 2010-2019 ....................................................... 36

Figure 26: Africa – Subsea Capex by Component, 2010-2019 ........................................................... 37

Figure 27: Africa – Subsea Capex by Water Depth, 2010-2019 ........................................................ 38

Figure 28: Asia – Subsea Capex by Component, 2010-2019 .............................................................. 39

Figure 29: Asia – Subsea Capex by Water Depth, 2010-2019 ............................................................ 40

Figure 30: Australasia – Subsea Capex by Component, 2010-2019 ................................................. 41

Figure 31: Australasia – Subsea Capex by Water Depth, 2010-2019 .............................................. 42

Figure 32: Eastern Europe & FSU – Subsea Capex by Component, 2010-2019 ....................... 43

Figure 33: Eastern Europe & FSU – Subsea Capex by Water Depth, 2010-2019 ..................... 44

Figure 34: Eastern Europe & FSU – Subsea Capex by Component, 2010-2019 ....................... 45

Figure 35: Latin America – Subsea Capex by Water Depth, 2010-2019 ....................................... 46

Figure 36: Middle East – Subsea Capex by Component, 2010-2019 ............................................... 47

Figure 37: Middle East – Subsea Capex by Water Depth, 2010-2019 ............................................ 48

Figure 38: North America – Subsea Capex by Component, 2010-2019 ....................................... 49

Figure 39: North America – Subsea Capex by Water Depth, 2010-2019 .................................... 50

Figure 40: Norway– Subsea Capex by Component, 2010-2019........................................................ 51

Figure 41: Norway – Subsea Capex by Water Depth, 2010-2019 ................................................... 52

Figure 42: RoWE– Subsea Capex by Component, 2010-2019 ........................................................... 53

Figure 43: RoWE – Subsea Capex by Water Depth, 2010-2019 ...................................................... 54

Figure 44: UK– Subsea Capex by Component, 2010-2019 .................................................................. 55

Figure 45: UK – Subsea Capex by Water Depth, 2010-2019 .............................................................. 56


Contents

Tables

Table 1: Subsea Production and SURF Competitive Landscape .......................................................... 27

Table 2: Pipeline Competitive Landscape ........................................................................................................ 27

Table 3: Global – Subsea Capex by Region, 2014-2019 ......................................................................... 34

Table 4: Global – Subsea Capex by Component, 2014-2019 .............................................................. 35

Table 5: Global – Subsea Capex by Water Depth, 2014-2019 ........................................................... 36

Table 6: Africa – Subsea Capex by Component, 2014-2019................................................................ 37

Table 7: Top Four African Fields by Subsea Tree Installations ............................................................... 38

Table 8: Africa – Subsea Components, 2014-2019 .................................................................................... 38

Table 9: Asia – Subsea Capex by Component, 2014-2019 ................................................................... 39

Table 10: Top Four Asian Fields by Subsea Tree Installations ................................................................ 40

Table 11: Asia – Subsea Components, 2014-2019..................................................................................... 40

Table 12: Australasia – Subsea Capex by Component, 2014-2019 .................................................. 41

Table 13: Top Four Australasian Fields by Subsea Tree Installations .................................................. 42

Table 14: Australasia – Subsea Components, 2014-2019 ....................................................................... 42

Table 15: Eastern Europe & FSU – Subsea Capex by Component, 2014-2019 ......................... 43

Table 16: Top Three East European Fields by Subsea Tree Installations .......................................... 44

Table 17: Eastern Europe & FSU – Subsea Components, 2014-2019.............................................. 44

Table 18: Eastern Europe & FSU – Subsea Capex by Component, 2014-2019 ......................... 45

Table 19: Top Four Latin American Fields by Subsea Tree Installations ........................................... 46

Table 20: Latin America – Subsea Components, 2014-2019 ................................................................ 46

Table 21: Middle East – Subsea Capex by Component, 2014-2019 ................................................. 47

Table 22: Top Three Middle Eastern Fields by Subsea Tree Installations ......................................... 48

Table 23: Middle East – Subsea Components, 2014-2019 ..................................................................... 48

Table 24: North America – Subsea Capex by Component, 2014-2019......................................... 49

Table 25: Top Four North American Fields by Subsea Tree Installations ........................................ 50

Table 26: North America – Subsea Components, 2014-2019 ............................................................. 50

Table 27: Norway – Subsea Capex by Component, 2014-2019 ........................................................ 51

Table 28: Top Four Norwegian Fields by Subsea Tree Installations .................................................... 52

Table 29: Norway – Subsea Components, 2014-2019 ............................................................................ 52

Table 30: RoWE – Subsea Capex by Component, 2014-2019 ........................................................... 53

Table 31: Top Four RoWE Fields by Subsea Tree Installations ............................................................. 54

Table 32: RoWE – Subsea Components, 2014-2019 ............................................................................... 54

Table 33: UK – Subsea Capex by Component, 2014-2019 ................................................................... 55

Table 34: Top Four UK Fields by Subsea Tree Installations ..................................................................... 56

Table 35: UK – Subsea Components, 2014-2019 ....................................................................................... 56


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