Data gathered and analyzed by Douglas Westwood Ltd. Shows that the global deepwater expenditure by component trends upward from 2004 through 2011, leveling off between 2011 and 2013 at US $35 billion per year. (Source: The World Deepwater Market Report 2009-2013)

The world financial crisis has impacted the budgets of operating companies, but deep water, which is developing into a long-term growth sector, will not be one of the line items that comes under scrutiny.

Operating companies are continuing to invest in technologies that will help them develop deepwater fields, and many are continuing to pour money into E&P, despite hard economic times.

At the GE Oil & Gas conference in Florence, Italy, in January, Margareth Øvrum, executive vice president of technology and new energy at StatoilHydro, said her company’s objectives have stayed the same despite trying financial times.

StatoilHydro is investing in technologies for deep water that target deeper drilling in the Gulf of Mexico, Øvrum said, along with harsh-environment technologies that will open the far north. “Our R&D funding for 2009 will be at the same level as 2008 despite the financial crisis,” she said. That level is relatively high at nearly US $325 million.

Meanwhile, Petrobras, which delayed announcing its investment plans for several months, revealed in late January 2009 its intent to continue pouring money into exploration and production, with an annual average spend of $34.9 billion. In fact, E&P showed the most significant increase in comparison with the 2008-2012 business plan.

Petrobras plans to spend 53% of the $174.4 billion budgeted for the 2009-2013 period on E&P.

According to a report released by Infield Systems Inc. last year, dropping oil prices are likely to bring down the overall number of projects per annum and to reduce capex levels, but unless the oil price falls dramatically from where it is today, planned projects will not be hugely impacted. The world still needs a lot of oil and gas, and bringing fields into production is a top priority for operators.

Many of the fields in development are in deep water, which is why a substantial amount of R&D money is going toward technology that will make production at greater water depths possible.

According to Dr. Michael R. Smith, chief executive of Energyfiles, “Around 32% of the remaining recoverable oil volumes that will be extracted over the next century lie offshore, while just over 20% of the oil produced up to end 2007 came from offshore areas. Around 18% of offshore volumes that will be extracted over the next hundred years lie in water depths greater than 1,000 meters(~ 3,000 ft).”

Analysis that appears in Douglas Westwood Ltd.’s recently released World Deepwater Report gives details about the amount of money going into deepwater development.

The report, which covers the period 2009-2013, provides an overview of the growing deepwater sector of the offshore industry and the value of deepwater world markets.

According to the report, the deepwater oil and gas sector will spend an average of more than $32 billion annually during the period 2009 to 2013.

The key drivers behind the dramatic growth in deepwater activity, Douglas Westwood says, include the growth in global energy demand, the lack of shallow-water and onshore opportunities, and new technological advances that improve the technical and economic feasibility of deepwater developments.

One of the components of the report is a segment that examines current technology used in deepwater developments and discusses its limitations. The report also looks at some of the emerging deepwater technologies, including autonomous underwater vehicles, innovative floating production system concepts, new drilling technologies, and subsea processing and metering.

Interestingly, last year, analysts at Douglas Westwood forecast that overall, the deepwater sector would continue its growth trend, reaching an annual total of over $24.6 billion by 2012. At that time, expenditure in the deepwater sector was projected to expand at a compound annual growth rate of 5.9% between 2008 and 2012, with particularly strong growth coming from the Asia and Latin America regions.

The recent report indicates that despite the world financial crisis, little has changed.

Overall, the outlook is one of significant opportunity. Admittedly, there are many challenges, but there is major potential for the players that have invested resources to develop the technology that will open more deepwater fields for production.