Onshore drilling is set to decline 20 per cent this year, resulting in the smallest annual production growth for six year at just one per cent, according to a report.

The first quarter 2015 edition of Douglas-Westwood’s (DW) World Drilling and Production Market Forecast  noted that offshore drilling will continue growth at three per cent per year, until 2018 when a lag in sanctioned projects will cause a slowdown in activity.

This will translate into a slowing of offshore production growth from 2019 onwards, it said.

The annual number of wells drilled will fall 11 per cent from 2014-2015, which is in addition to the decline in drilling over 2013-14, said the forecast.

Covering 60 of the key oil and gas producers worldwide, the forecast took into account a large number of data and information source, in addition to DW’s in-house offshore database, which catalogues every visible offshore oil and gas project worldwide.
 
Over the past twelve months, significant changes were witnessed to the upstream sector from quarter-to-quarter. Conflicts in the Middle East, delays to megaprojects and oil price fluctuations led to adjustments in forecasts.
 
The Q2 2014 edition saw a notable development in Egypt – the government pledged to repay $1 billion of the $6.2 billion owed to foreign international oil companies and independents. This saw the return of investor confidence to the North African nation, thus DW upped Egypt’s combined production forecast from 1.5mboe/d to 2.1mboe/d by 2020 – with projected gains from offshore gas projects.
 
For the Q3 2014 edition of DWD&P, the headline forecast change was for Iraq. Over June and July last year, the Islamic State invasion of large parts of northern Iraq added significant downside risk to the country’s forecast – DW revised its Q3 2014 oil production forecast down from 6mb/d to 4.1mb/d.

Some optimism remained, however, as the majority of Iraq’s producing oilfields are located in the south of the country, well away from the area of conflict.

Five countries were added to the report coverage, including Mozambique and Sudan/South Sudan. Mozambique was added on the merit of its large gas reserves, which have increased dramatically in recent years, as well as being the location for ENI’s ambitious and exciting plans for up to three FLNG vessels in its Area 4 block.

The forecast changes for Q4 2014 and Q1 2015 editions had an overriding theme – oil price. The 50 per cent drop in oil price from June/July 2014 to the time of writing has led to significant alterations, particularly in key onshore drilling sectors, said the report.

Revisions were made for both quarterly updates to the US and Canada drilling forecasts as operators reduced 2015 capex – leading to rig releases and job cuts.

DW has predicted the total number of onshore development wells drilled in North America for this year will be 30 per cent lower than the 2014 total, which compares to growth of eight per cent predicted prior to the oil price crash. - TradeArabia News Service