Some 15,000 offshore wells will be drilled worldwide during the next five years, at a cost of approximately $189 billion, estimate analysts at Canterbury, England-based research firm Douglas-Westwood Ltd. About 4,500 wells will be exploratory and cost $75 billion; the other 10,500 wells will be development and cost $114 billion. While approximate drilling and completion expenditures were nearly $36 billion in 2003, future spending levels "are expected to grow over the next two years and then decline slightly, stabilizing at about $37 billion per year," the firm reports. A significant change will be continued growth in deepwater drilling: roughly 3,000 to 3,200 offshore wells are drilled annually and 12% of them are now in deep water. This may grow to some 17% of all wells drilled in 2008 or 30% of total spending on drilling and completing deepwater wells during the next five years. "This is an increase from $37 billion, [or] 22% of the total, in the previous five-year period," says the study's author, Michael R. Smith of EnergyFiles Ltd.. Overall, the firm expects drilling levels will become opportunity-constrained and forecasts an 8% decline-even if oil prices climb. The firm also does not foresee new, revolutionary drilling processes making a major impact on spending. In another note, the firm reports that, in 2003, Africa and Latin America had deepwater drilling spending that surpassed shallow-water drilling spending for the first time, and this gap will grow during the next five years. As for other regions, the most spending will be in North America ($57 billion), increasing by $3.4 billion. This is even though the total number of wells drilled will decline slightly. Latin America and Africa are forecast to experience an increase in expenditures of $6.1 billion and $8 billion, respectively, or 43% growth. The forecast for Asia is mostly unchanged and the outlook for Western Europe is for a decline in spending by 12%, despite increased costs, the firm reports. Offshore rigs will increasingly be able to drill in more than 3,053 meters of water, which is the current record, the firm adds. And the shallow-water semisubmersible market will weaken in the Gulf of Mexico and North Sea, counterbalanced by increased demand in West Africa, India and China during the initial two years of the forecast period. As demand for natural gas continues to grow, demand for high-specification jackups will remain buoyant, especially for Gulf of Mexico deep-shelf gas. As a result, "most new expenditures on drilling rigs are expected to be directed at upgrades of both jackups and floating rigs to allow faster drilling and deeper-water and/or deeper-reservoir drilling," the firm estimates.