Deepwater projects account for a major source of new production for the majors and for national oil companies (NOCs) such as Petrobras and Statoil, but investment in deep water varies across companies, with peak net volumes from new projects ranging from 36,000 boe/d to more than 1.6 MMboe/d. These volumes will contribute greatly to medium-term output (through 2014), but companies will need to bring new projects onstream to replace the production from their deepwater fields.

Petrobras will continue to outspend the other operators in deep water through 2020. (Images courtesy of PFC Energy)

From a development capital expenditure perspective, Brazil overshadows deepwater spending due to the presalt, but it still accounts for just 38% of deepwater capex spending for a sample group of six majors and two NOCs.

Scale, timing

In examining deepwater production from new projects, Petrobras is the clear leader of the pack, accounting for 40% of the total new production from the eight companies included in the study, followed by Statoil, which accounts for 16%, and BP, which accounts for 14%. Total has 9% of the total, followed by Shell, Chevron, and ExxonMobil, which each account for approximately 7%. ConocoPhillips has the smallest deepwater portfolio of all of the majors.

Brazil will allocate the most capex dollars for new deepwater projects in the next 10 years.

Production from new deepwater projects will peak in 2013 or 2014 for most companies. For Petrobras, peak production is expected to be 1.7 MMboe/d, followed by Statoil at 760,000 boe/d. BP’s peak volume will be approximately 609,000 boe/d, while Total will peak at 466,000 boe/d. Chevron, ExxonMobil, and Shell will peak in a range between 320,000 boe/d and 370,000 boe/d. ConocoPhillips’ peak volume from currently identified projects is expected to be 66,000 boe/d.

By 2017, all of the companies will be facing deepwater production declines, which will create a replacement need.

NOCs have focused on their home countries for production, while ExxonMobil and Total will rely on West Africa for nearly 70% of their new deepwater volumes between 2009 and 2020.

ExxonMobil’s production from new deepwater fields faces the steepest decline. By 2020, currently identified fields will produce just 38% of peak output. ConocoPhillips has a similar profile, but at a much lower level. Chevron, Shell, and Total have flatter production curves, with 2020 output amounting to 69% to 74% of peak rates, while BP is lower at 57%. Petrobras faces the shallowest decline with 2020 output expected at just 11% below peak levels (for new projects), and that is including only Tupi of its presalt developments.

Petrobras and Statoil dominate their home markets.

Capital expenditure by region

The amount of capex required to develop deepwater projects totals approximately US $220 billion for the eight companies analyzed. Broken out regionally, Brazil dwarfs all other regions because of the large presalt developments. Africa comes in second with $50 billion in estimated capex. Northwest Europe, the US Gulf of Mexico, the Former Soviet Union (FSU), Asia Pacific, and the Mediterranean have a combined capex equal to that of Brazil. Even so, almost 40% of total deepwater capex ($86 billion) from currently identified projects will come from outside the core areas of Brazil and Africa.

Chevron, Petrobras, Statoil, BP, and Shell operate more than half of the new deepwater projects.

Country risk

Most NOCs have focused exploration efforts in their home countries, although Statoil has production in Angola and the US. ExxonMobil and Total will rely on West Africa for nearly 70% of their new deepwater volumes between 2009 and 2020. BP will also rely on West Africa, particularly Angola, and on the US for most of its new deepwater production, with smaller amounts from Norway. Shell has a geographically spread portfolio in Brazil, the US, and Norway. ConocoPhillips will see new volumes from Norway and Malaysia. Not surprisingly, Petrobras and Statoil dominate their home markets.

There are 45 companies that have fewer than 10 deepwater projects in their portfolios.

In the US, BP has the largest share of new output among the majors, followed by Chevron and Shell. In Nigeria, Total and ExxonMobil have the largest percentage of deepwater production, followed closely by Chevron. In Angola, Total is the largest among the majors, followed by BP, ExxonMobil, and Statoil. In other countries such as Egypt, Malaysia, and Indonesia, ConocoPhillips and Shell are the largest deepwater producers from new fields.

Operated vs. non-operated

There are 57 companies that have at least one new deepwater project. Of these companies with deepwater acreage, only 26 will operate even a single project. The remaining 31 have solely non-operated stakes.

Five companies — Chevron, Petrobras, Statoil, BP, and Shell — operate more than 50% of new deepwater projects. With the exception of Statoil, these are companies that tend to operate the projects in which they invest. Statoil, Total, Eni, and ExxonMobil have invested in more projects where they are not acting as field operators.

There are an additional 45 companies that have fewer than 10 total deepwater projects in their portfolio. While a few smaller deepwater players operate their own projects (Woodside, Murphy, Anadarko, BHP Billiton, Mariner, CNR, Tullow, Noble

Energy, ATP, and Reliance), the vast majority of players in the deep water have invested in non-operated stakes.

Deepwater dependence

The dependence on deepwater projects of the companies examined varies considerably. Almost 90% of Petrobras’ new output comes from the deep water. Statoil, BP, and Total will get anywhere from 40% to 70% of their new production from deep water fields, while ExxonMobil, Shell, Chevron, and Conoco-Phillips will have a deepwater dependence of less than 30%.

Almost 90% of Petrobras’ new output comes from the deep water.

For most companies, dependence on deepwater production remains fairly steady in the 2009-2020 period.

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