2013 and 2014 have seen significant pipeline installs in the Gulf of Mexico. Lucius and Jack St. Malo export lines are the main contributors to the spike in installation activity for 2013 and the increased installation activity in 2014 as well as other large projects such as The Keathly Canyon Connector, SECKO pipeline and exports serving Big Foot and Delta House are large contributors to the increase of 15”-19” & 20”-24” categories in this region for these two years. This region is expected to see a lull in installation activity in 2015 and 2016 before picking back up in 2017. The Forecasted five year installation demand is largely composed of pipeline infrastructure for developments such as Anadarko’s Lucius, Chevron’s Big Foot, LLOG’s Delta House, and BP’s revamped Mad Dog Phs 2 development.
The North Sea is expected to see a dip in installation activity in 2016 but is expected to begin recovery in 2017 building each year after into 2019. . West of Shetlands, Norwegian Sea, and Barents Sea activity provides upside within the forecast in addition to contributions from more the more traditional UK and Norway North Sea areas. The Polarled pipeline contributes to 2015 North Sea (Norway) export pipeline demand.
The Africa Mediterranean region including the Black Sea has seen a drastic decrease with the confirmed cancellation of the Gazprom’s South Stream Pipeline in the Black Sea. Saipem and Allseas have been notified of installation contract cancellations and have stopped operations for the project. The project included pipeline strings of 931 km for each causing a drastic decrease in the forecast for the region. Quest had indicated this project could be in jeopardy due to the Russian-Ukrainian crisis which put the necessary permissions from the EU at risk.
The global pipeline forecast for 2015 and 2016 has fallen 20% from previous forecast due to the cancellation of the South Stream Pipeline and low oil prices.
There are a number of market factors affecting demand potential out of Asia. Most notably is the lack of activity of Australia. Contributors include, but are not limited to risk associated with local natural gas prices as the large gas fields require stable and agreeable natural gas prices to be commercial. Also, many of these fields are considering utilizing FLNG technology but operators seem to be waiting for operational results from Shell’s Prelude once it comes on stream. China has also been lack luster with respect to expected activity from the area. Political concerns in Indonesia have already created project delays.
The North Sea will see a 60% drop in subsea activity in 2014 compared to 2013 driven largely by reduced activity in the UK sector. Where we had three large greenfield executions in 2013, 2014 will only see one and brownfield activity went from 20 subsea tree awards in Q1-Q3 2013 to 3 in the same time frame of 2014. Quest expects subsea tree demand to start recovering in 2016 as more opportunities are available.
Africa holds a number of projects in execution backlog which are forecasted to fall in the next 12-15 months. These projects, inclusive of Bonga, Agbami Phs 2, Prosperidade, are expected to support a positive outlook for regional demand in 2015 and 2016. Africa is also a growth market for IOR solutions, one of which is infill drilling requiring new subsea hardware. As the early-2000’s generation of FPS units get older, oil companies are likely to drill additional production wells to keep production levels up which will create an ongoing demand for new subsea equipment throughout the forecast.
The Petrobras-driven Brazilian market poses challenges when trying to understand subsea tree demand potential. Through audits and research this summer, Quest was able to allocate a large part of the standard subsea trees and 10K PSI trees awarded to Aker Solutions, OneSubsea and FTI in the past five years. With this allocation, Quest expect Petrobras to resume ordering subsea equipment if they expect to maintain their schedule of anticipated project startups.
North America saw its first contributions to deepwater from Mexico in Q3 2014 as Pemex awarded its Lakach project to OneSubsea. This appears to be the first of many opportunities for the Mexican National Oil Company to contribute to subsea demand. Exploration success around Canada also provides strength to the long-term forecast.
Over 60 percent of the U.S. Gulf of Mexico subsea tree awards are forecast to come from a combination of brownfield campaigns and independent oil company demand. Big international oil companies are keen to maintain optimal production levels through many IOR techniques, one of them being infill drilling. Many independent oil companies are looking at, not only, acquiring older production hubs and executing infrastructure-led drilling for additional production as well as new projects to tie back to aging infrastructure.
Brazil may be silent from the subsea tree market this year, but they have been aggressively ordering subsea manifolds from the likes of FTI, Aker Solutions and GE Oil & Gas. This Brazil activity has buoyed 2014 global subsea manifold orders to over 60 units representing an estimated US$2.5+Bn.
Aker Solutions, OneSubsea and FTI saw 80% of the subsea tree awards YTD 2014. Aker Solutions and FTI were awarded 70% of the subsea control modules and 80% of the subsea manifold orders in the first three quarters of the year. With the high dollar value of Aker’s win of Kaombo and the higher price tag for subsea manifolds, this puts Aker Solutions and FTI in good standing to see the lion’s share of subsea order value through September 2014.