New oil and gas developments are needed to not only cater for this rising demand but also replace the production from those many existing fields whose output is now declining. As most onshore reserves have been exploited to a considerable extent, explorers and producers are increasingly relying on offshore oil and gas fields for their new supplies. Offshore oil production, for example, is set to grow from 21 million barrels per day (bpd) in 2008 to 27 million bpd in 2013, a 23% increase over the five-year period.
As with current onshore oil and gas projects, developing new offshore fields is presenting greater challenges than was the case in the past. Projects now being implemented are normally located in deeper, more remote and more environmentally harsh waters than was previously the case.
The first choice for exploiting offshore oil fields has proved to be the floating production storage and offloading (FPSO) vessel and the popularity of the concept has grown in tandem with the increasing complexity of oil field development work. There are 250 floating oil production units presently in service, up from 117 units five years ago, and of the current total 155 are FPSOs. Furthermore, according to data compiled by International Maritime Associates Inc., 35 of the 49 oil production floaters now on order are FPSOs.
Flexibility and their proven safety record are two key reasons why FPSOs are in favour. Both newbuilding and tanker conversion FPSOs can be customised to meet the requirements of a particular field while there is sufficient deck space for the required topsides units and storage capacity enough to enable development of the deposit in a way that is commercially attractive to all the participants. The offshore oil industry has also fine-tuned its FPSO mooring and cargo transfer techniques to ensure smooth operations in most marine environments.
Furthermore, because FPSOs are self-propelled marine units, a vessel can be unhooked once a project is complete and sailed to the next field for which it is earmarked. Such redeployment, which might well be delayed because the charterer has exercised the option of extending the original contract period, invariably entails a visit to a repair or fabrication yard for any modifications which may be required for the new project.
The demand for FPSOs is expanding at the rate of 5-10% per annum at the moment. In addition, the size and complexity of the latest generation of FPSOs is increasing in conjunction with the move into deeper waters and the development of more challenging fields. The greatest depth of water at which an FPSO is currently operating is 2,500 metres while the highest throughput on such a vessel is 600,000 bpd.
A case in point is the development of the deepwater fields in the Santos Basin and pre-salt deposits off the coast of Brazil. Brazil and West Africa are currently the world’s major users of FPSOs, each accounting for 23% of the in-service fleet. However, Brazil is dominating the production floater orderbook; 19 of the 49 floaters on order are earmarked for use off Brazil.
Another recent development of interest is the decision by the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), a US Government agency established in the aftermath of the blowout on the Deepwater Horizon rig in April 2010, to allow the first FPSO in the US Gulf to commence operations. The vessel in question has been ready for some time but the Deepwater Horizon disaster delayed implementation of the project.
The worldwide demand for additional FPSOs, either through tanker conversions or newbuildings, is being enhanced by the fact that several in-service vessels are nearing the end of their useful working lives. The IMA data shows that of the in-service units three have been stationed on a field more than 20 years, eight for more than 15 years and 27 for more than 10 years. The consultancy expects that at least half of these units are redeployment candidates, particularly the 15 that have operated in the North Sea for more than 10 years and two that have operated off Australia for more than 10 years.
Charterers seeking to employ FPSOs over the long-term are anxious to engage with contractors with exemplary safety and environmental records, proven technical competence and financial strength, an established track record and credentials, links with key yards and subcontractors and a wide-ranging service portfolio.
Customers of FPSO services are being facilitated in this quest through the major consolidation that has taken place in the sector in recent years. Despite the overall expansion of the FPSO fleet, the number of such contractors now stands at 12, down from approximately 30 in 2008. The remaining operators of FPSO vessels also offer their clients a lease option, covering both financial and operational arrangements.
A key indicator of the vitality of the FPSO sector is the growth in overall investment, currently running at a rate exceeding 15% per annum. Another new and notable feature of today’s FPSO statistics is the appearance of liquefied natural gas (LNG) FPSOs for the first time. IMA lists four LNG FPSO projects as being likely to materialise by 2016 in its latest report.
Amongst the fossil fuels, gas is currently the most favoured due to the ample supplies available and, hence, the competitive price of gas compared to oil. The exploitation of offshore gas over the current period is set to develop at a rate double that of oil. Offshore gas production is expected to top 1,000 billion cubic metres in 2013, 47% ahead of the 700 billion cubic metres achieved in 2008.
Offshore gas has traditionally been exploited by means of pipeline links to shore but the more remote and marginal nature of many of the fields now being investigated favours an offshore solution. However, while several LNG regasification vessels are now in service, they tend to be employed in protected, nearshore waters and the first LNG producer vessel is yet to make its appearance.
The LNG industry has been hard at work over the past decade, developing the sophisticated shipboard LNG liquefaction and cryogenic cargo transfer technologies that will enable safe and secure LNG FPSO operations to become a reality. The first final investment decision for an LNG FPSO is imminent and that milestone is likely to open the floodgates.
Of the initial four LNG projects identified by IMA, three will be developed in the Australasia region while the final scheme is likely to come together off the coast of Brazil. The latter FPSO will be utilised to exploit the gas streams of several new oil FPSO projects planned for the deepsea pre-salt fields offshore from Rio de Janeiro. The world of FPSOs is about to take on a new dimension.
Editor's Note: Mike Corkhill is a technical journalist and consultant specialising in oil, gas and chemical transport, including tanker shipping and chemical logistics. A qualified Naval Architect, he has written books on LNG, LPG, chemical and product tankers and is currently the Editor of both LNG World Shipping and LPG World Shipping. Source: BIMCO
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