The purpose of exploration activity is to identify commercially viable reserves of oil and gas. The conditions necessary for such reserves to have accumulated are complex and largely dependent on past geological history and present geological formations and structures. For the deposits to occur, particular combinations of potential source and reservoir rocks together with migration pathways and trap structures are needed. Finding such reservoirs and estimating the likelihood of them containing oil and gas is a technically complex process requiring the use of a range of techniques. Such techniques include deep and shallow geophysical (seismic) surveys, shallow drilling and coring, aero-magnetic/gravity surveys and exploration and appraisal drilling.

Based on a general geological understanding, broad areas of the earth have been identified as prospective, with the potential to contain reserves of oil and gas. Prospective areas are further defined using surface/shallow mapping techniques and geophysical (seismic) surveys to aid understanding of deeper, subsurface geology. Aero-magnetic and gravity surveys are useful in defining general structure such as sedimentary basins but not for pinpointing areas with potential oil and gas. Areas of potential interest are subjected to further geophysical study, which may involve reinterpreting existing seismic data or conducting new surveys.

The only reliable way to determine whether the identified formations contain hydrocarbons is to drill into them. However, the decision to drill is not taken solely on geological grounds. Government requirements, economic factors (drilling costs, transport costs, market opportunities, relative merit/financial risk) and technical feasibility (including safety and environmental considerations) are all factored into the decision.

A principal reason for the widespread exploration activity is the rapid growth in world demand for energy. The current annual increase in oil production is close to a billion barrels. It is greater than the annual output of Saudi Arabia or of Iran, two of the world's largest producing countries. At today's rate of increase, the consumption of oil 20 years from now will be nearly four times that of today, and the use of petroleum gas will increase at an even greater rate.

To replace the oil consumed and maintain a safe inventory, the industry will look more and more to offshore exploration and development. Today the offshore industry is an increasingly important part of global oil and gas supply. Indeed, as conventional onshore production has leveled-out, and in some cases declined, it has been new offshore developments that have sustained the level of production required to meet increasing global demand for hydrocarbons. According to Infield Systems Offshore Energy Database, total offshore oil production accounted for 22% of global production in 1% of which was from deepwater. In 2013 these figures had risen to 33% and 7% respectively. The prospects for the future remain equally positive with total deepwater production expected to account for 11% of global oil production by 2015.

Current Status of Offshore E&P

Although the first offshore oil well was drilled in the early 1900s off of the coast of California, the beginning of modern marine drilling was in 1938, with a discovery in the Gulf of Mexico, 1 mile (1.6 km) from the US coastline. After the Second World War, offshore drilling expanded quickly, first in shallow waters adjacent to known land-based production areas, and then to other shallow and deep water areas around the world, and in climates varying from the Arctic to the Persian Gulf. In the beginning, offshore drilling was possible only in water depths of about 91 m; however, modern platforms are now able drill in waters over 3.2 km deep. Offshore oil activities include exploration, drilling, production, processing, underwater construction, maintenance and repair, and the transport of the oil and gas to shore by ship or pipeline.

Drilling platforms support drilling rigs, supplies and equipment for offshore or inland water operations, and range from floating or submergible barges and ships, to fixed-in-place platforms on steel legs used in shallow waters, to large, buoyant, reinforced concrete, gravity-type platforms used in deep waters. After the drilling is completed, marine platforms are used to support production equipment. The very largest production platforms have accommodations for over 250 crew members and other support personnel, heliports, processing plants and crude oil and gas condensate storage capability.

The worldwide spread of interest in the search for petroleum offshore in recent years has been extraordinary. This could only have resulted from outstanding exploration success. Growth in the offshore E&P bodes well for players in the support segment of the oil production. For example, 3,480 offshore wells were drilled in 2011, marking the offshore drilling market worth up to USD38 bil. The positive development has prompted oil rig contractors, oil rig services and offshore deepwater technical company to increase their investment in advance E&P equipment plus research and development. It is a race that many wish to win as there are 33,400 fleets of offshore drilling rigs available for lease. With 6.6% global annual growth on drilling expenditure for offshore oil, we believe over the medium term, many other new players will join the industry despite it being a costly venture.

Brand Event