SLB’s Le Peuch: Offshore oil and gas “experiencing a renaissance”
Written by Nick Blenkey
Renaissance man: SLB CEO Olivier Le Peuch. [Photo: SLB]
“Offshore [oil and gas] is experiencing a renaissance, with significant breadth and anticipated durability. Driven by the imperative of energy security, regionalization, and North American shale supply discipline, operators across the world are looking to hasten discovery to renew supply, accelerate development cycle times, and increase the productivity of their offshore assets.” That’s the message from Olivier Le Peuch, CEO of Houston-headquartered oilfield services giant SLB (the company formerly known as Schlumberger).
In a presentation prepared for today’s J.P. Morgan Energy, Power & Renewables Conference 2023, Le Peuch says that offshore, from shallow to deepwater, is experiencing a broad resurgence with currently more than 400 active offshore rigs, which, he says, “is projected to grow low to mid-teens this year, and we anticipate further double-digit growth in 2024.”
“And the outlook beyond 2024 is strong. Between 2022 to 2025 we anticipate more than $500 billion in global FIDs across over 30 countries, with more than $200 billion attributable to deepwater,” Le Peuch continued. “In total, the expected offshore investment during this period will represent a 90% increase compared to 2016 through 2019.
“This resurgence is being supported by three key levers. First, infill and tie back activity is accelerating in mature basins which is very visible in 2022 across Africa. Second, large development projects are scaling up in Guyana, Brazil, and the Middle East, both in oil and gas. Together, these create a broad opportunity in the subsea market. In 2022, 348 subsea trees were awarded, the most since 2013, and there will be approximately 300 awarded this year.
“And third, there is a return of exploration and appraisal, notably in new frontier offshore provinces such as Namibia, Tanzania, Colombia, India, and East Mediterranean – to name a few. This year, we anticipate offshore exploration spend to increase more than 20% and see a long tail of activity with 65 lease rounds concluding globally, in addition to several countries awarding leases through open door policies.”
HERE TO STAY
Le Peuch thinks the trend is here to stay.
“Over the last decade, advances in efficiency through technology and digital have resulted in lower costs and reduced cycle times in offshore developments, significantly improving project economics,” he says. This has resulted in lower break-evens and has given E&P operators the confidence to invest in these long-cycle projects. Of the $500 billion in FIDs planned between 2022 to 2025, approximately 85% are viable at commodity prices below $50, decoupling them from short term price volatility.
“Additionally, offshore production today is safer and more efficient than ever before with reduced risks and costs, and as emission reduction priorities begin to impact investment decisions in the upstream landscape globally, the lower carbon intensity of offshore operations will continue to add to its value proposition.
“With these factors at play, we expect the offshore market to strengthen in the coming years and we are uniquely positioned to harness this opportunity.”
