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Challenges faced by offshore oil and gas sector

Despite growing investments in renewable energy, it is a fact that the world needs to be fuelled by oil and gas for the next few decades at least. However, as onshore resources drying up, the world is swiftly moving towards offshore oil and gas exploration and operations.

Offshore oil and gas exploration and production is one of the industries that has changed drastically in terms of technological developments and operation styles in the past decade. So, what are the key technological and business challenges faced by the offshore oil and gas industry?

Let’s take a look:
Retrieving oil under extreme pressures: 

Offshore oil and gas operations often involve drilling and retrieving oil under extreme pressures; in other words, for every 33 feet of descent, pressure increases by 14.5 psi. Therefore, needless to say, offshore deepwater operations involve extreme dangers related to high pressure, low temperature and visibility.
Moreover, due to the need for technologies that can work in extreme environments, offshore oil and gas firms also face high costs when drilling in deep waters. In fact, on average, the deepwater oil & gas exploration CAPEX is at least $100 million. 
Extreme weather conditions: 
Offshore drilling and production platforms are like living on a knife-edge. The crew often has to work under extreme weather conditions. Furthermore, technicians have to continuously check whether the installation and all systems above and below water are running safely and smoothly. 
The strong variability in ocean current strength, direction and vertical shear  as well as in wave height and periodicity apply strong loads on all material increasing significantly the fatigue on the medium and long term.

A continuously improved understanding of ocean conditions and variability are key elements for the development of sustainable, safe and reliable offshore material and operations. 
Price volatility

Oil prices are highly volatile and susceptible to large price drops as observed recently due to world geopolitical situation. Compared with onshore energy projects, offshore oil and gas projects involve hefty investments, hence being much more sensitive to these price variability. Hence, offshore energy production still requires absolutely to cut down on production and operation costs. This will only be possible through appropriate new technologies such that no cut is applied to personnel safety and material reliability.

Regardless of these difficulties, offshore oil and gas sector continues to expand and attract investments. The key lies in finding appropriate tools to save time and cutting down expenses. 

Future Outlook: 

In spite of price drop as much as 27% a barrel since 2014, oil and gas companies continue to invest billions of dollars in offshore exploration and development. 

Peculiarly, West Africa and Brazil's offshore market has boomed in 2015, along with substantial development in Mexico, Middle East and Asia. According to an industry study by Douglas Westwood, the Americas, along with Africa, will continue to dominate deepwater CAPEX spending with $213 billion. 

Offshore oil & gas exploration and production being such a long process, the main operators need to continuously invest as the future potential findings represent their future assets. Hence, the drop in oil price surely affects investments but not as strongly as one could expect, as the major players always have to think on the long term.  



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