OIMT_2013_09Global offshore production of natural gas totalled 98.3 billion cubic feet per day (bcfpd), or 17.5 million barrels of oil equivalent per day (mboepd) in 2012. In comparison, world offshore oil production in the same year was 24.4 mbpd. Thus in terms of aggregate energy output, gas accounted for 42% of combined offshore oil and gas production. Here we examine the strong growth trends associated with this substantial element of offshore production.

Gas Guzzling Growth

As the Graph of the Month shows, in the 30 year period 1983-2013 global demand for natural gas is projected to have risen by 130%: 82% for OECD and 189% for non-OECD countries. Developing economies’ gas demand overtook OECD gas demand in 2004, and since then non-OECD gas demand growth has accelerated to 192 bcfpd, exhibiting a 3.8% CAGR in the period 2008-13. However, whereas demand for oil in OECD countries fell 5.5% in the period 2008-13, gas demand still grew steadily, reaching a projected 151 bcfpd in 2013 with a 1.6% CAGR since 2008.

Production Buoyancy

Rising demand across the board has incentivised supplyside growth, manifest in the offshore sector as a 231% increase in gas production in the period 1983-2013. The graph shows that historically NW Europe and North America were the main offshore gas production regions, accounting for 54% (35 bcfpd) of world production at their 2001 peak. In 2008 Middle East/ISC production reached 20.6 bcfpd with the addition of gas from Iran’s Pars South field, thereby becoming the foremost offshore gas producing region. By 2013 it accounted for 33% of world offshore gas production. The rise of the Middle East was complemented by a more gradual but still vast rise in Asia Pacific production, from 14.0 bcfpd in 2000 to 22.7 bcfpd in 2013: 22% of world offshore gas output. NW Europe, North America and the Mediterranean account for 17%, 9% and 9% respectively.

Offshore Diffusion

At the start of September 2013 there were 261 fields under development that will produce associated or non-associated gas. 124 are scheduled to come onstream by end 2014, including 6 Pars South projects producing a total of 12.8 bcfpd. Much of the growth in offshore production in the mediumterm future is due to come from such large projects located in emergent offshore gas regions. For example, 2 trains of the Mozambique LNG project are scheduled to start up in 2018, using gas from the prolific offshore Rovuma Basin to produce LNG equivalent to 1.3 bcfpd natural gas, with 5.3 bcfpd from a further 8 trains to follow. In Australia and the East Mediterranean too, large projects like Greater Gorgon and Leviathan promise to significantly enhance world offshore gas production.

Although offshore production may have to compete with cheaper onshore (and in some regions, unconventional) gas production, global offshore gas production is nonetheless forecast to increase by a further 37% by 2020 to just under 140 bcfpd. The proliferation of large offshore gas projects and the overall trends in production and demand all suggest a bright future for offshore natural gas.

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