In 2023, market players might incur losses due to huge gap in currency translation followed by contracting revenues, shrinking profit margins & cost pressure on logistics and supply chain.
Controlling Inflation has become the first priority for global economies from last quarter of 2022 and to be followed in 2023. With skewed economic situations, rise in interest rate by governments to control spending and inflation, spiked oil and gas prices, high inflation, geo-political issues including U.S. & China trade war, Russia-Ukraine conflict to intensify the global economic issues.
The interest rates in the U.S. may be less sensitive in 2023 as compared to 2022; sigh of relief for businesses. Positive business sentiments, healthy business balance sheets, growth in construction spending (private construction value in 2022 stood at $1,429.2 billion, 11.7 percent (±1.0 percent) above the $1,279.5 billion spent in 2021, Residential construction in 2022 was $899.1 billion, up by 13.3 percent (±2.1 percent) from $793.7 billion in 2021, non-residential construction touched $530.1 billion, 9.1 percent (±1.0 percent) above the $485.8 billion in 2021.) showcases minimal impact of recession in the country.
Similarly, spiked spending in the European and major Asia economics including, India, China & Japan to showcase less impact on the global demand.
Decommissioning is the final step after the completion of a well in an offshore site to dis-locate the oil well platform safely without damaging the perforation, ecosystem and the operators. This step is necessary to take the shifting of platform to next site location and to safely plug the well which involves cleaning the wellbore, removing all the down-hole equipment’s, pulling out the casing & tubing’s, placing the surface plugs and filling the fluids in between the plugs in an optimal manner with the help of data collection, preliminary inspection, selection of abandonment method and the use of slick line unit.
The decommissioning involves a process of nine steps that start with management of the project and ends at material disposing and site clearance. The process involves engineering and planning, permitting and regulatory compliance, platform preparation, well plugging & abandonment, conductor removal, mobilization & demobilization of derrick barges, platform removal, pipeline & power cable decommissioning.
Conductor casing 15ft below the oceanic floor must be removed with the approval of supervisor by following procedures i.e., offloading, which utilizes a rental crane to lay down each conductor casing segment in a platform staging area, offloading sections to a boat, and offloading at a port. The conductors are then transported to an onshore disposal site.
The increase in the production for oil and gas in offshore sites is the reason for the growth of CAGR in the future which is expected to be 6.93% by 2027. Approximately 8% of the global reserves have been found and are currently utilized for extraction purposes. It is anticipated that the remaining portion of the resources would be identified in the near future and would require the use of decommissioning for servicing and dispatching of oil platforms from the sea sites.
The government rules and regulation for environmental safety, the need of service providers for plugging the well and moving the platform will always be there.
According to the International Energy Agency, 85 million barrel of oil that is consumed per day is extracted from offshore wells. This demand is expected to increase in the future which is resulting in further development of offshore reserves.
There is a rise in opportunity for the companies involved in decommissioning activities for offshore platform over the forecast period. It is anticipated that by the 2023, the oil production will reach 18 million BOE per day from 7.5 million BOE per day in 2015 which will be enabled by extensive technological advancements for deep water drilling to produce the energy from sea shore.
Europe is covering the majority of market in offshore decommissioning and North America is the second leading country after the Europe which is decommissioning the maximum number of platforms every year.
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Our-in depth analysis of the global offshore decommissioning market includes the following segments:
By Service Type
Global Offshore Decommissioning Market is further classified on the basis of region as follows:
The demand for the decommissioning market is directly proportional to the number of drilled wells and the amount of wells which are already producing oil and gas. New extraction sites are expected to be developed in the future which could increase the operations for extracting crude oil from the sea. Middle Eastern region exhibits significant growth in their economy, they will try to keep it constant for long time with the continual operations in extraction and drilling process. Also, the oil reservoirs are getting developed and is expected to mature in 10-15 years. This covers only half of the portion of oil in offshore site that can be extracted because no other substitute sources are viable and reliable economically and environmentally. Due to cost associated constraints, the adoption of electric cars is presently limited when compared to that of vehicles run by conventional fuel.
China, India, US and Japan have imported in a huge amount of crude oil in the recent years because of the rising population and is expected to follow the same trend which can affect the growth of industry.
Some of the challenges faced are the design safety constraints of the tubing pipe at the down-hole due to rusting and corrosion resulting in additional maintenance procedures. The clashes in the OPEC also plays out the vital role in oil prices, other is the sanctions from the US government to the countries which are producing crude petroleum affects the decommissioning services.
Another challenge for the adoption of offshore decommissioning is the declining price of crude oil along with regulatory constraints restricting the interest of investors towards oil and gas industry.