Oil Demand

  • IMA/World Energy Reports has just completed a comprehensiveassessment of the five year outlook for the deepwater sector.  The new report – the 19th annual floater market forecast prepared by IMA since 1996 -- provides our forecast of orders for floating production systems between 2016 and 2020.  Here’s an overview of the findings and conclusions in the report.

    Bottom Line
    We see the downturn in market conditions and implosion of Petrobras as a bump in the road.  While the outlook is clearly dimmer than last year, there is a large backlog of planned projects requiring floating production systems – and the long term fundamentals to support investment commitment in these projects remain very solid.  But the next 12 to 24 months will test the resilience of field operators and contractors in the deepwater supply chain.

    The Current Situation
    After four decades of rapid growth, the deepwater sector has suddenly stumbled.  Very few orders were placed in 2015 for floating production systems.  Only 2 FPSOs have been ordered since January of this year– compared to 12+ orders annually over the past decade.  The downturn in orders reflects the general unravelling in industry conditions.  Virtually every company in the supply chain feels threatened by business softness.  Capital expenditures are being sliced and deepwater project starts deferred. Personnel reductions are being announced on a daily basis, rig contracts are being cancelled or renegotiated, assets are being written down.

    What happened?

    Behind the downturn is an imbalance in oil supply and demand brought on by the emergence of shale/tight oil and inability of major producers to coordinate a ramp-down of global output.A huge oversupply of oil is in the market.  The result has been a plummeting of oil prices over the past year --reducing cash flow and prompting oil companies to severely cut back on capital expenditures to conserve cash.
    Add to this the implosion within Petrobras.  The major player in the deepwater sector has been largely taken off the field by a corruption scandal.  More than a third of expected FPSO orders over the next five years were to be generated by Petrobras.  But the company’s financial problems have caused a massive cut back in planned project starts.  In 2014 Petrobras was planning to acquire13 additionalFPSOs for project starts between 2018/20.  Now it is planning to acquire 5 FPSOs – and questions remain about the ability to finance even this reduced number of FPSOs.

    Is a Rebound Likely?
    Absolutely.  Clearly there will be a rebound in the deepwater sector.  It will be driven by increasing global oil demand and need to find new sources of oil to replace depleting sources. Global oil demand has been growing at an average rate of 1.4% annually over the past 20 years.With the exception of two years during the global financial meltdown, oil demand has increased year over year during this period.
    Looking forward, industry analysts differ on the rate of future oil demand growth, but not on whether growth will continue.  For example, the IEA sees world oil demand in 2040 growing to 104 mb/d, an increase of 10 mb/d over current consumption. The EIA predicts global oil/liquid fuel consumption will grow to 119 mb/d by 2040, a 30% increaseover the present. OPEC expects oil demand to grow to 111 mb/d in 2040, up 18% from global oil consumption in 2015.
    Among the oil majors, ExxonMobil expects an average growth of 1.2% in oil demand through 2025, followed by a 0.5% growth between 2025 and 2040. BP calls for world oil demand to grow at an average rate of 0.8% annually through 2035. Ultimately new oil sources will be needed to accommodate this demand growth – as well as replace supply losses as depleting oil fields come off line.  Deepwater is among those new sources.

    What Will Drive the Rebound?

    We are tracking more than 240 offshore oil and gas projects in the planning stage that likely require a floating production system for development.Some of these projects will require multiple systems. If all projects proceed to development, up to 275 new production floaters will be required over the next 10 to 15 years. A large backlog of eligible projects is significant – but only part of the picture in forecasting future production floater orders.  Ultimately an investment decision is needed to transform these deepwater project opportunities into contracts for floating production facilities. In our forecast report we examine eleven underlying business drivers that will influence the timing and direction of future deepwater project investment decisions.  Here’s how we see these eleven drivers at the moment.

    In the positive category are
    •    Oil and gas demand keeps growing
    •    Supply disruption potential keeps the focus on finding new sources of supply
    •    Long term oil/gas prices will rise, driven by demand/supply fundamentals

    In the negative category are

    •    Near term oil and gas prices have fallen to levels that discourage investment
    •    Major energy companies have been cutting back on capital expenditures
    •    More supply has suddenly come into the oil and gas market
    •    Shale/tight oil and gas projects are competing for investment funds
    •    Local content constraints in the supply chain are creating delays and overruns
    •    Petrobras, the major customer, is having serious financial problems
    •    Cost of capital for deepwater projects will rise over the next several years

    In the unknown category are

    •    Black swan events can (and have) disrupt the sector

    Interaction of these drivers over the next few years will determine the number and timing of future production floater orders.
     

    Forecast for Orders

    In the most likely scenario, over the next five years we expect orders for 64 oil/gas production units (FPSOs, Semis, Spars and TLPs), 29 LNG processing units (FLNGs, FSRUs) and 25 storage/offloading units (FSOs).  Capex associated with the building and conversion contracts will be in the vicinity of $106 billion.  A breakdown of the forecast by size unit, region, year order placed, new or modified hull, etc. is provided in the new report.
    In the high scenario we anticipate a considerably stronger pace of orders.   Here we expect orders for 77 oil/gas production floaters, 36 LNG processing units and 30 storage/offloading units.  In the low scenario the number of orders is expected to be 45 oil/gas production floaters, 22 LNG processing units and 20 storage/offloading units.
    The 2016/20 forecast is significantly lower than the five year forecast last year.  There we projected orders for 98 oil/gas production units, 25 LNG processing units and 30 storage/offloading units.  . 
    Details for the production floater forecast are provided in our new 186 page report.  Information about the report, including the table of contents and list of exhibits, is available at

    www.worldenergyreports.com

     

    (As published in the November 2015 edition of Maritime Reporter & Engineering News - http://magazines.marinelink.com/Magazines/MaritimeReporter)


     

  • from a number of new studies on oil, gas and renewable energy published by his firm, Westwood said, "Any growth in global economic activity increases oil demand such that at 1% demand growth a production peak occurs in 2016. at 2% it occurs in 2012, and at 3% it occurs in 2008. "The world's known and

  • spending budgets and deepwater drillers are not quite as bullish as in recent past.  Growing Demand for Oil and Gas On the positive side, global oil demand has grown at an average rate of 1.4% annually over the past 20 years.  With the exception of two years during the global financial meltdown, oil

  • 2000. The Drivers Oil market fundamentals continue to strengthen. The outlook for world economic growth continues to be good, forecasts call for oil demand to increase and the oil producers appear to have engineered a soft landing for oil prices. According to the IMF, the world economy in 2000 will

  • tonnage. The accelerated phase-out of 12 percent of the world tanker fleet over the next two years coupled with the forecasted increase in global oil demand should offset the current tanker orderbook. As a result, we expect the current tight balance between tanker supply and demand to continue during

  • as well as low natural gas prices, and thus lack of natural gas for oil substitution, resulted in an additional reduction of about 0.9 million bpd in oil demand compared to the same period a year ago." Scrapping activity has recently picked up and is presently at a 30,000,000 dwt annualized rate. While

  • down. In the latest Oil Market Report dated May 11, 2001 from the International Energy Agcncy (IEA), the organization notes that first quarter 2001 oil demand appears to have fallen short of expectations by more than a half million barrels of oil per day, yet still grew at 1.1 mb/d. Meanwhile, world oil

  • will be around for a long time. Over the longer term, measured in decades, the Class Society DNV GL, in its 2018 Energy Transition Outlook, says that: “Oil demand will peak in the 2020s and natural gas will take over as the biggest energy source in 2026.” They added, “Existing fields will deplete at a faster

  • marine business in the GOM region is a prosperous one. While a recent (May 11, 2001) report from the International Energy Agency notes that global oil demand has dipped in recent months, a look at the big picture shows that global oil demand has grown from 74.8 million barrels per day in 1999 to 76

  • , geopolitical factors and U.S. oil infrastructure issues aside, abundant shale oil supplies in the near term and the impact of energy transition on oil demand in the medium-to-long term will likely serve as constraints on drilling a substantial number of new offshore wells.Given these structural shifts

  • drivers for deepwater development point toward continued sector growth. Spot and futures crude pricing is at levels supporting deepwater development. Oil demand keeps growing and there continues to be need for new future sources of oil. The threat of supply disruption from traditional sources remains, prompting

  • industry afloat, collectively they assess   Swedbank’s chief economist, Harald Andreassen, isn’t “too hopeful” about the long-term prospects for the oil price, but then again, “I’m less certain of this than I’ve ever been as an economist,” he told a floating production conference in Oslo. After two-and-half

  • MN Jun-19#27 PROPULSION
Trolling Mode (TM) the full throttle  Cimco)
    June 2019 - Marine News page: 27

    PROPULSION Trolling Mode (TM) the full throttle Cimco cites comparative ? gures for Safety, Performance and TCO “From a safety aspect for the com- range represents 20 percent of normal fuel consumption at wide-open throttle mercial users it was thought desirable throttle range. This enables a higher

  • MN Jun-19#22  Project Manager on 
salvage and oil spill response operations)
    June 2019 - Marine News page: 22

    operations, he has served as a senior Coast Guard Of? cer, Incident Commander, Salvage Master, Commercial Diver and Project Manager on salvage and oil spill response operations from the Equator to the Arctic. Jim holds a Bachelor of Science in Environment Management with distinction, a Master of

  • MN Jun-19#17 board companies were not able to de- gap in the market for)
    June 2019 - Marine News page: 17

    board companies were not able to de- gap in the market for a diesel, high Safety was a big issue for military operators when deploying gaso- sign a more durable engine, but the power to weight, performance out- line outboards. Were military pa- truth is that they simply haven’t tried to board. With NATO

  • MN Jun-19#16 INSIGHTS
outboard. This difference is ampli?  ed when)
    June 2019 - Marine News page: 16

    INSIGHTS outboard. This difference is ampli? ed when looking below the engine or because the drives are permanently in the water. the mid-range rpm. The increased low-end torque will push The Navy on the other hand, will be able to deploy missions heavy loaded hulls through rough waters with less

  • MN Jun-19#14 INSIGHTS
investor and Chairman Charles Good. After a few)
    June 2019 - Marine News page: 14

    INSIGHTS investor and Chairman Charles Good. After a few years of development, interest was sparked from the US Government and UK Ministry of Defence (MoD). The MoD’s Defence Science and Technology Laboratory (DSTL) was so im- pressed by the concept, it agreed to provide Cox Powertrain with “invaluable

  • MN Jun-19#6 EDITOR’S NOTE
he end of one era typically signals the)
    June 2019 - Marine News page: 6

    EDITOR’S NOTE he end of one era typically signals the start of another. And, so it is with the business of building naval and municipal patrol boats, where the demand for smaller, more agile and T versatile hulls has skyrocketed. At the same time, and as governments everywhere come to the realization

  • MR Jun-19#54  the BOQA concept?
In 2013, the Oil Companies International)
    June 2019 - Maritime Reporter and Engineering News page: 54

    . How does BOQA work in typical applications? BOQA is basically a decision-support tool designed What led you to develop the BOQA concept? In 2013, the Oil Companies International Marine Fo- to enhance maritime safety and enable proactive de- rum (OCOMF) submitted a paper entitled The Proac- cision-making

  • MR Jun-19#52 T
TECH REPORT MARINE FUELS
“The feasibility report showed)
    June 2019 - Maritime Reporter and Engineering News page: 52

    T TECH REPORT MARINE FUELS “The feasibility report showed that it could be done, but we wanted to prove it. When looking at the business side [of the com- pany], we saw a really big demand for hydrogen fuel cell vessels” Dr. Joseph Pratt, CEO & CTO of Golden Gate Zero Emission Ma- rine (GGZM), a

  • MR Jun-19#51 T
TECH REPORT MARINE FUELS
used for new vessel builds and)
    June 2019 - Maritime Reporter and Engineering News page: 51

    T TECH REPORT MARINE FUELS used for new vessel builds and retro? ts around the world. “The Chicken Comes First” One of the oft-quoted challenges is the “chicken and egg” dilemma when a dis- ruptive propulsion technology enters the maritime market. Critics will claim that ship owners are reluctant to

  • MR Jun-19#50 T
TECH REPORT MARINE FUELS
Hydrogen: The Next Big Thing?
By)
    June 2019 - Maritime Reporter and Engineering News page: 50

    T TECH REPORT MARINE FUELS Hydrogen: The Next Big Thing? By Joseph DiRenzo, PE Hydrogen Fuel Cell Technology to leading voice in the ? eld is Dr. Joseph gers in the Bay Area. cap and trade program aimed at reducing Satisfy Future IMO Requirements Pratt, CEO and CTO of Golden Gate According to Dr.

  • MR Jun-19#45  
a ranking of the largest crude oil charterers. Typically,)
    June 2019 - Maritime Reporter and Engineering News page: 45

    (owned and charterers. On the tanker side, brokers Poten compiles chartered) stood at 57 million tons deadweight (mdwt) a ranking of the largest crude oil charterers. Typically, in early 2018. Though hefty sounding, this ? gure repre- the large cargo interests may control ? eets of vessels sents 6%

  • MR Jun-19#44  SHIPOWNERS
Danske Bank, Maersk Oil, its tanker division, )
    June 2019 - Maritime Reporter and Engineering News page: 44

    Ori- divested investments in Danish supermarkets, ent Overseas Container Line (OOCL). Unlike THE WORLD’S “BIGGEST” SHIPOWNERS Danske Bank, Maersk Oil, its tanker division, other mergers, the well-known OOCL brand Source: VesselsValue and, most recently, Maersk Drilling. It has has remained; after

  • MR Jun-19#42 2019
TOP SHIPOWNERS: 
IS BIGGER BETTER?
Like any other)
    June 2019 - Maritime Reporter and Engineering News page: 42

    2019 TOP SHIPOWNERS: IS BIGGER BETTER? Like any other business, some shipping companies are bigger than others. This article looks at some of the larger participants in the various sectors. “Big” can be de? ned in multiple ways. Here, contributing editor Barry Parker takes a deep dive into the data

  • MR Jun-19#37 world yearbook
BY COURT SMITH, SENIOR ANALYST, VESSELS)
    June 2019 - Maritime Reporter and Engineering News page: 37

    world yearbook BY COURT SMITH, SENIOR ANALYST, VESSELS VALUE Infrastructure continues to expand, carriers has increased over the past the spectrum and pulling spot rates sition in US based LNG projects has and pricing incentives will continue several years. More than 60 countries upwards. ignited a

  • MR Jun-19#28  ?  ve years will include black oil and re- the ?  rst time)
    June 2019 - Maritime Reporter and Engineering News page: 28

    forcement of regulations on U.S. ? agged vessels. For Alarmingly, the ? eet of large U.S.-? ag vessels en- over the next ? ve years will include black oil and re- the ? rst time, the Coast Guard presented information gaged in international trade has declined from approxi- ? ned petroleum products, petrochemic

  • MR Jun-19#27  reported 
84,319 gallons of oil were spilled as a result)
    June 2019 - Maritime Reporter and Engineering News page: 27

    half the transportation sector and double the rate for all fatal work injuries. On the environmental front, the USCG reported 84,319 gallons of oil were spilled as a result of 49 tank barge pollution incidents in 2017. The largest spill was the result of an explosion and ? re aboard a barge at

  • MR Jun-19#26  due to a radically changed oil industry and 
violation)
    June 2019 - Maritime Reporter and Engineering News page: 26

    continue to face to get a passing grade, after which the cars operated in increasing future-year emission estimates. pressure due to a radically changed oil industry and violation of the Clean Air Act. Commercial marine and locomotive source catego- must take quick and decisive action in order to survive

  • MR Jun-19#24 . 
high sulfur fuel oil (HSFO) from the  The oil)
    June 2019 - Maritime Reporter and Engineering News page: 24

    – and in continental ner — the IMO 2020 regulation bans tual availabilities. changes the picture. Europe (ARA) and the Mediterranean. high sulfur fuel oil (HSFO) from the The oil majors, though mum on their Scrubber uptake will mean some of They expect that sales of compliant fuels bunker pool. Although

  • MR Jun-19#18  seemingly endless sources of oil, 
gas and coal, and nuclear)
    June 2019 - Maritime Reporter and Engineering News page: 18

    decades. Consider energy use, say, start- ing after World War II, from 1950 to 1975. There was power for everything, from seemingly endless sources of oil, gas and coal, and nuclear power was standing by. Next, recall energy from 1975 to 2000. Not so happy. Most shocking – actual energy shortages, and

  • MR Jun-19#17  like Blount  as compared to an oil and gas project.  port)
    June 2019 - Maritime Reporter and Engineering News page: 17

    a wind farm project list. Finally, encourage Congress to sup- bill. And, prices are coming down to Forward-thinking yards like Blount as compared to an oil and gas project. port an extension of the PTC or Invest- levels competitive with natural gas. (See Boats in Warren, Rhode Island, have al- This is

  • MR Jun-19#9  are ran-
Taro® Ultra cylinder oils
domized. Analysis of existing)
    June 2019 - Maritime Reporter and Engineering News page: 9

    have learned enough about the exam to pass it with- out having to comprehensively study the material, even if the questions are ran- Taro® Ultra cylinder oils domized. Analysis of existing systems set up this way shows that it is not un- common for the average trainee to write join the an online exam

  • MT Jun-19#61  21
APRILMAYJUNE
Ocean Energy: Oil, Wind & Tidal Underwater)
    June 2019 - Marine Technology Reporter page: 61

    AUVSI XPONENTIAL April 9-11, Southampton, UK Mar 29- Apr 2 Chicago, IL Ad Close: Mar 21 Ad Close: Apr 21 Ad Close: May 21 APRILMAYJUNE Ocean Energy: Oil, Wind & Tidal Underwater Defense Technology Hydrographic Survey: Single & Multibeam Sonar Workclass ROV Navy Research Institutions Underwater Lights

  • MT Jun-19#60 Products GPS, Gyro, MEMS, Tracking
Horizon IMU to Complete)
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    Products GPS, Gyro, MEMS, Tracking Horizon IMU to Complete the Navsight Marine Solution SBG Systems debuted the Horizon nology to the most demanding environ- indicators for satellite availability, RTK IMU, a FOG-based high performance ments such as surveying highly dense as corrections, and power.

  • MT Jun-19#59  of the separate sen he oil and gas in (ROVs) working)
    June 2019 - Marine Technology Reporter page: 59

    vehicles lator-relator activities. dent vehicle applications, but also au- tonomous and unmanned underwater Tight integration of the separate sen he oil and gas in (ROVs) working in the oil and gas in- “Tight integration of the separate sen- tonomous and unmanned underwater sors within SPRINT-Nav as