By any crystal ball, 2001 looks like a good year for oil and gas, and big money already is moving toward the sweet spots.
Analysts forecast gains close to 20% for exploration and production spending during 2001.
Salomon Smith Barney oil service analyst Geoff Kieburtz said worldwide upstream spending will total about US $114 billion this year, a 20.2 % increase from 2000.
Lehman Brothers' Jim Crandell, managing director and senior oil service analyst, said the 344 companies he surveyed will spend $103.2 billion this year, up 19.1% from the $86.6 billion they spent last year. Those 344 companies account for 90% of total reported upstream spending.
The Lehman survey predicted a 19.1% increase for the United States, from $25.3 billion to $30.2 billion; a 19.9% gain for Canada, from $10.4 billion to $12.4 billion; and a 19% improvement for non-North American projects, from $50.9 billion to $60.6 billion.
International spending will be a big winner, up 20.6% this year, compared with an 8.4% increase last year. North America's 40.5% spending gain from 1999 to 2000 will slow to 19.6% this year, Kieburtz added.
ExxonMobil, BP Amoco and Royal Dutch/Shell show where big money is going, and their emphasis is offshore and in
deep water.
That makes the hot spots of the world the Gulf of Mexico, offshore Brazil, offshore West Africa, the North Sea and some of the Asia-Pacific region. Kieburtz said twice as many companies expect to increase offshore spending as plan to increase onshore spending.
Production investment budgets will collect the big dollars.
For example, Enterprise Oil plans to spend $600 million for a floating production, storage and offloading (FPSO) vessel for development of Bijurpa and Salema fields offshore Brazil.
The big mover in this area, however, is Petrobras. It plans to spend $4.15 billion this year on exploration and production.
Petrobras had planned to spend part of a $3.5 billion budget to move Roncador field into full production, and it still will have
to spend big money to replace the lost
P-36 platform.
The company also has lined up $190 million in financing for an FPSO for Espadarte field and is lining up another $300 million for phase II of its Albacora field development to increase production to 150,000 b/d from 50,000 b/d.
Energy analysts Douglas-Westwood Ltd. and Infield System said the industry may raise annual investments in West Africa from $2 billion to $10 billion by 2005 for development of 176 fields. Nigeria and Angola will lead the way with another 192 platforms producing up to 1.2 million b/d in each country. West Africa may get 33 new FPSOs, some the size of the $900 million Girassol FPSO.
ExxonMobil plans two FPSOs in Block 15 offshore Angola and possibly another for Ehra offshore Nigeria. Statoil's Bilah-1 discovery in OPL 218 offshore Nigeria established Nnwa field and a potential $1 billion development.
The Triton Energy Ltd. budget contains up to $211 million for continued development of Ceiba field offshore Equatorial Guinea.
The Gulf of Mexico is hot. Shell Exploration & Production's Kepler prospect on Mississippi Canyon 383, the Ariel prospect in Block 429, the Fourier prospect in Block 522, the Herschel prospect in Block 520 and the East Anstey prospect in Block 563 are going to be tied into the $1.3 billion Na Kika project.
Elsewhere, BP, Phillips and ExxonMobil have started a $75 million program for development of gas reserves on the North Slope of Alaska. Phillips will spend 75% of its $1.25 billion US budget in Alaska.
Shell Canada will invest $4.2 billion in Canada in the next 5 years, $1.8 billion of that in the Athabasca tar sands. Suncor Energy's $935 million capital program includes $450 million for its $2.8 billion Project Millennium oil sands expansion.
Moody's Investors Services estimated annual growth in South American oil and gas production at 3% to 4%, with exploration and production investments of $180 billion to $240 billion during the next 10 years. Repsol YPF plans to spend $8 billion through 2017 as it develops its Loma La Lata field onshore Argentina in the Neuquen Basin.
Big money also is on the line in Venezuela as TotalFinaElf starts producing its $4 billion Sincor heavy oil project with production of 40,000 b/d expected by the end of the year. Also in Venezuela, BP will invest $800 million in the next 3 years to relaunch operations in the Lake Maracaibo area and increase production by 200,000 b/d.
Contractors, operators, suppliers and trade unions predict the industry will spend $6 billion in the UK North Sea in 2001, up from $1.5 billion in 2000.
In the Norwegian sector, Statoil will begin its first investments in the $1.6 billion Kristin project, a semisubmersible platform that could provide a gas a condensate hub for Tyrihans, Lavrans and Ragnfrid. Pressure from this project may push BP into accelerating development of its $860 million to $1.6 billion Skarv oil and gas field development in the Norwegian Sea. Norsk Hydro also will narrow the options this year for development of its $3 billion Ormen Lange gas project in the Barents Sea.
In the Middle East, Iran has earmarked up to $2.8 billion for investment in the giant Azadegan oil field. The field, with 6 billion bbl of oil reserves, has potential production of 400,000 b/d. Enterprise Oil won a 20% stake in three phases of development of offshore Iran's South Pars field with gross costs estimated at $2.65 billion during the next 3 years.
Shell plans to invest $300 million in oil and gas fields in western Siberia and Sakhalin Island during 2001, up from $200 million last year.
Farther south, India's Oil and Natural Gas Corp. will invest $640 million in the first phase of a $1.5 billion redevelopment of Mombai High fields offshore western India.
In the Caspian Sea area, Brown and Root has completed initial engineering for the $10 billion full field development of Azeri, Chirag and Gunashli fields offshore Azerbaijan.
Among investors, Gulf Indonesia Resources Ltd. will spend $150 million this year, mostly in South Sumatra.
Off Australia, Phillips, Woodside Petroleum and Shell are continuing the $1.6 billion development of the Bayu-Undan gas prospect in the Timor Sea.