In 1947, the first offshore oil discovery was drilled out of sight of land. Albeit only 29km away from the Louisiana coastline, and in water depths of just 4.3m, this achievement began an new era of offshore oil production. The movement of offshore operations into deeper and more remote regions has been previously documented by Clarkson Research, and as this trend continues we take a look at how the industry has prepared for this development.
Deeper and Darker
The Graph of the Month shows the trend in the characteristics of all known offshore oilfields against their year of discovery. As the more accessible fields became less available and less productive, companies moved further offshore and into deeper waters. In 1970 the average distance from shore of known oilfields stood at 60km, with the average water depth being 54m. By 2013 the average distance to shore had more than doubled to 134km, and the average water depth was 15 times deeper at an impressive 876m.
As well as increasing average water depths and distance to shore, many newly discovered fields are also in areas designated as harsh environments. Vessels operating in these frontier regions may face adverse weather conditions, longer periods of deployment and greater demand for capacity in order to maximise their efficiency.
Building for Tomorrow
In response to these more challenging requirements, the offshore industry has already altered its contracting preferences. One example of this is the trend in newbuild contracting of PSV vessels. Large PSV (>4,000 dwt) newbuild contracting in 2012 was almost 5 times higher than the number of contracts in 2009. In comparison small PSV (<3,000 dwt) newbuild contracting has decreased by 14% in the same period. The average deadweight of PSV contracted increased by almost 60% between 1990 and 2012, from 2,500 dwt to 4,000 dwt.
Another example of the offshore industry’s response to the increased water depths of newly discovered fields can be seen in the volume of newbuild orders for drillships. At present the number of drillships on the orderbook stands at 80, which is 88% of the current active fleet. In comparison to this the orderbook for Jack-Up rigs capable of drilling up to 300ft is just 13 units, a mere 4% of the existing fleet, highlighting the move from low specification, shallow water drilling units towards higher specification, deep water rigs.
Whilst newbuilding of higher specification units has increased, some exceptions do remain. For example, ordering of ice class vessels has slowed in recent years despite an increase in Arctic exploration. Whilst this is still a developing sector which could fuel medium-term contracting demand, it is understandable that the recent focus of contracting has been on units intended for warmer waters. This is where the majority of deep water discoveries have occurred, and is the reason the offshore industry is gearing up for remote drilling accordingly.