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While the offshore industry appears to be past the worst of a sustained downturn, the recovery will continue to be gradual over the next few years, according to analysis from the Westwood Global Energy Group. Bristow Photo

Offshore helicopter industry sees annual spend increase for first time in 4 years

By Oliver Johnson | October 17, 2018

Estimated reading time 4 minutes, 10 seconds.

This year will see an increase in annual expenditure in offshore helicopter services for the first time in four years, according to new analysis unveiled during a conference session at Helitech International 2018 in Amsterdam, the Netherlands.

While the offshore industry appears to be past the worst of a sustained downturn, the recovery will continue to be gradual over the next few years, according to analysis from the Westwood Global Energy Group. Bristow Photo
While the offshore industry appears to be past the worst of a sustained downturn, analysis from the Westwood Global Energy Group suggest the recovery will continue to be gradual over the next few years. Bristow Photo

“It’s nice to be able to stand in front of the industry at a conference and say we are past the bottom of the downturn — we are seeing activity starting to pick up,” said Steve Robertson, director, head of oilfield services at Westwood Global Energy Group, as he presented the findings.

“We’re now starting to see the green shoots of recovery in the big markets. In the North Sea we’re seeing day rates starting to trend upwards, particularly in Norway, and also in the UK as well.”

However, he cautioned that the recovery would not involve a dramatic return to the levels of activity seen before oil prices plummeted in 2014.

“We’re not expecting a ‘hockey stick’ type of recovery in the next few years; we’re expecting a fairly slow recovery in terms of expenditure as that recovery ramps up,” said Robertson.

According to Westwood’s figures, this will see about $7 billion of spending on offshore helicopter operations over the next five years — or roughly 10 million passenger journeys a year. The bulk of those journeys will be for production operations, with the average distance from shore for installed platforms continuing to increase from the current average of 70 miles (113 kilometers).

Over that five-year timeframe, the Westwood expects 118 new medium and heavy helicopters will come into service. However, both the medium and heavy global offshore fleets will continue to battle the problem of oversupply.

“The market is evolving favourably for the oversupply chain . . . [and] we do expect high levels of investment,” said Robertson. However, he added that higher oil prices are not yet resulting in better commercial conditions for service companies.

Looking ahead, the offshore transport industry should expect to see growth in demand away from the traditional oil-producing areas. “[It’s] going to come from areas that we’ve not really seen before in the offshore markets — the South China Sea and Australia, Southeast Asia, and the eastern Mediterranean,” he said.

In terms of the overall outlook for the oil-and-gas industry, Robertson said the general consensus among industry analysts it that oil prices will remain flat to 2024. The Baker Hughes Rig Count shows a recovery in onshore activity, but the recovery of rig numbers offshore is “muted and delayed.”

New project investment will increase to $95 billion in 2018, from $60 billion in 2017. Much of that investment is for projects in Western Europe and East Africa, Robertson added.

There are currently 1,500 wells being drilled in shallow water, compared to a peak of 2,500 wells. Westwood expects some recovery in the number of wells being drilled in shallow waters — mostly through an increase in activity in the Middle East.

Deepwater drilling will see far less reliance on the “Golden Triangle” of the offshore oil-producing regions of the Gulf of Mexico, the Gulf of Guinea off West Africa, and Brazil. A more global spread of deepwater activity will be fostered through the development of areas in East Africa, off the coast of India, and the South China Sea.

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