Offshore spending to decline by 9% per year: Douglas-Westwood
The U.S. shale recovery will drive a 4% growth rate in onshore expenditures on oilfield equipment in the next five years, according to Douglas-Westwood. In its World Oilfield Equipment Market Forecast DW outlines predictions for the oilfield equipment industry.
Total onshore expenditures from 2017 to 2021 are projected to be $385 billion, compared to the $371 billion predicted for 2016-2020 in the previous edition of the report. DW expects all onshore equipment lines to grow in the next five years, fueled by the resurgence of drilling in the U.S.
Source: Douglas-Westwood
Offshore is another story
Offshore spending, however, is not expected to bounce back as onshore spending has. According to Douglas-Westwood there have been minimal new orders since the downturn began and there is currently an oversupply of mobile offshore drilling units. The high cost low quantity nature of MODUs and persistent oversupply limits future growth. While some orders have already been placed in 2017, DW expects this to create an 8% jump in spend in 2017, but not reverse the overall decline trend.
The overall key conclusions of the World Oilfield Equipment Market Forecast, as summarized by DW are:
- 4% CAGR for onshore expenditure over 2017-2021.
- Onshore Rigs & Rig Equipment to show fastest growth rate (15% CAGR), but this is recovering from a 77% decline over 2013-2016.
- Onshore Midstream expenditure over next five years to be 13% higher than previous five years.
- Offshore expenditure to see -9% decline per year over the forecast period.
- Combination of oversupplied rig market and a dearth of new fixed & floating production orders contribute to -9% and -26% CAGRs respectively.
- Total oilfield equipment market to increase 12% this year, then decline at -1% year-on-year as the offshore decline offsets the onshore recovery.
