The subsea adventure has just begun. Within five years the subsea sector will double in size, and within twenty years the subsea production will be on par with traditional oil and gas production offshore.
– In five years, the subsea market is anticipated to grow from around $30 billion to between $60 and $70 billion annually, says Jarand Rystad, Oil Analyst and Managing Partner in Rystad Energy.
Rystad Energy is one of Norway’s leading market analysis and strategy consultancy companies in the oil and gas sector. In their analyses of the subsea sector, the graphs show black gold on the rise. The international subsea market is on the brink of immense growth, says Rystad.
Three different markets
Rystad divides the subsea market into three different sectors. First is the SURF market which covers installation, umbilicals, risers and flowlines. Second is the market for development and production of subsea equipment, and third is the market for inspection and maintenance of existing equipment.
– All three markets will experience strong growth until 2016 – 2017. We expect the SURF market to increase from around $15 billion to between $30 and $40 billion annually. The development and production market will increase from around $10 billion to around $20 billion. Inspection and maintenance is currently the smallest market. At present, this is a sector worth $5 billion and with great potential. We believe that this market will double by 2018, and may in the long term grow to the same size as the SURF market, says Rystad.
In other words, Rystad’s future prediction is a doubling or more in size for all markets.
Subsea will take the lead
At present, 70% of all oil is produced onshore. 30% is produced offshore and only 9% is produced subsea. According to Rystad it is the offshore production, and in particular subsea, that will experience growth.
– Subsea currently accounts for 9% of the total oil and gas production. By 2020, subsea will account for some 15%, says Rystad.
However, it will not stop there. Today, subsea installations produce 15 million barrels per day. By 2030, the daily production will increase to 35 million barrels.
– During the same period, production from traditional platforms will also increase from 28 to 35 million barrels per day.Hence, the subsea production in 2030 will be on par with the traditional oil and gas production offshore. Looking even further ahead, subsea will surpass traditional platforms in terms of production, says Rystad.
Three subsea waves
Norway is today the largest subsea nation in the world. According to Rystad, this position will be retained for a few years, but will then be assumed by other countries.
– The development in the subsea market is something we believe will come in three waves. We are currently in the first wave where Norway, and partly the UK, are the main players. The second wave is building and will arrive during the period 2013 – 2015. This will be a wave dominated by Australia and Western Africa. The third wave will take place in Brazil and the Gulf of Mexico during the period 2015 – 2020. Our prediction is that Norway will remain the dominating nation until 2015 – 2016, but this position will then be assumed by others, says Rystad.
Personnel is the major challenge
In the years to come, the most critical challenge for the oil industry as a whole will be recruitment. The sector is crying out for personnel.
– In my opinion, companies should start looking for expertise in the economies currently experiencing a downturn. It should be possible to retrain engineers from other specialist fields in order to cover some of the gaps in the oil and gas industry, says Rystad.