The latest edition of Westwood's World Oilfield Equipment Market Forecast has been released, with a notable improvement in the outlooks for both onshore and offshore markets. This is the result of daily adjustments to project timing, fresh regulatory filings, the continued improvement of sentiments in select markets – including fixed & floating platform construction and the North American drilling market – in addition to the incorporation of key findings from the recently released Future of Corrosion Resistant Alloys Report.
Global Expenditure Index Q3 Edition vs Q2 Edition by Location of Activity (2014=1), 2013-2022
Key Conclusions:
-Global expenditure of $720bn over 2018-2022, a 6% uplift on the June edition.
-Almost $72bn is expected to be spent on Floating Production System (including LNG FPSOs) construction over the forecast.
-557 fixed platforms to be installed over 2018-2022, compared to 523 in the last edition.
-The latest Energent data has increased 2018 expectations in the US onshore market, though growth will slow dramatically due to pipeline bottlenecks.
-Activity in Canada is also trending upwards, and is expected to continue, particularly in the long run following the sanctioning of the country's first LNG export terminal at the end of September.
-Offshore rig construction continues to weigh on the outlook, however, with a -10% CAGR for the sector over the forecast.
With Brent oil prices now sitting comfortably above $80/bbl, there have been some notable improvements in the outlook for oilfield equipment over the next five years, particularly in the offshore space. While the level of sanctioning expected through the first 9 months of the year has been lower than expected, the value of the projects now expected to get the green light over the coming 18 months has increased – particularly for fixed platform developments. For the offshore oilfield equipment sector, especially within the fixed & floating platform construction market, this has resulted in a material upgrade in Westwood's expectations for expenditure levels from 2019 onwards (all capex phased equally from year of order to year of installation). This uplift in expectations has also impacted the drilling outlook, with broader effects than just the production unit construction market. Overall, Westwood now expects a total of $298bn to be spent offshore over 2018-2022, compared to $273bn in the Q2 edition of the report.
In the onshore market, the latest data from Energent shows that 2018 drilling activity will be higher than anticipated in the Q2 report, with over 19,000 wells now expected to be drilled in the US onshore market. This is an uplift of c.4,000 wells, with a c.2,000 well uplift also seen for 2017, as a result of improvements in data extraction processes from regulatory filings in addition to the continual catch-up of reporting lags. Over the forecast, Westwood expects activity in the US to slow as midstream bottlenecks in the prolific Permian basin reduce both drilling and completion. While there will be some switching of focus to other basins, such as the MidCon and Eagle Ford, this is unlikely to maintain the growth trajectory for the US onshore drilling market. Despite this, Westwood still expects the North American onshore OFE market to total $212bn, with a 4% CAGR over the 2018-2022 forecast period.
Westwood has also incorporated the findings from the recently released Future of Corrosion Resistant Alloys Report in this edition of the report, with upwards revisions to OCTG capex estimates in some geographies.
The World Oilfield Equipment Market Forecast offers unique insight into over 60 different equipment types across upstream and midstream and is an essential product for business planners and those looking to make informed investment decisions. Drawing from Westwood's SECTORS product and a wide-range of other internal databases (including land rigs, pipelines, helicopters and upstream infrastructure), the World Oilfield Equipment Market Forecast also takes account of the latest macro-economic trends through daily updated databases and explicit commodity price, global inflation and supply chain pressure inputs.
Source: Westwood Global Energy Group