FPSO'S

[SageWise]

Floating Production Storage and Offloading (FPSO) Market Summary
By Jeni Hyland, Market Analyst,
Quest Offshore Resources
http://www.offshoresource.com/pdf/Feb08OS.pdf
Introduction
The world’s first FPSO was introduced in 1977 on Shell’s Castellon field in the Mediterranean Sea. It would not be the first for long. In the very next year, Petrobras converted
a tanker and deployed this new FPSO concept in its Garoupa field. The FPSO market has come a long way since its inception in the late 1970s. Offshore technology was still in its infancy and the tanker market was struggling due to escalating oil costs caused
by conflict in the Middle East, which included the closing of the Suez Canal. Away from this volatile region however, offshore oil
exploration was already gaining momentum, and the industry saw a use for these idle tankers. In the early years, FPSO units were
mainly conversions. It wasn't until the 1980s that the first purpose-built units were delivered. In recent years, high oil prices and strong demand for oil have boosted marginal
oilfield economics making their development more attractive to operators. A large number of these oilfields will utilize FPSO
units - both newbuilds and conversions alike. Attested as a cost-effective means of developing marginal, deepwater and early production/phased offshore fields worldwide, the global fleet will continue to grow into the future. Just this year, 12 new FPSOs came online. In the past five years, 56 FPSOs have
come online and in the next five years, the market figures to see the start up of a minimum of 103 FPSOs, an increase of 184%.
Forecasted Demand
Recent years have seen a rapid increase of the global fleet, prompted in part by an increased demand for drilling units which
has reduced the number of semi-submersible rigs available for conversion. However, conversions and purpose built vessels are both being deployed in nearly equal numbers. Forecasted activity covering the period to 2012 alludes to Africa and Asia dominating
FPSO demand. Remote infrastructure in both Africa and Asia is likely the leading driver for the development of FPSOs, coupled
with large blocks and phased developments in Africa. Together these two regions comprise 56% of the current worldwide
Floating Production Systems (FPS). FPSOs will make up nearly 60% of the FPS market during the next five years. The FPSO market
is being led by Brazil and West Africa with China, Australia, India, Indonesia, Malaysia and even the Falkland Islands expected as possible future areas for development of FPSOs. Powerhouse deepwater regions include Angola, Nigeria, Brazil and the US
Gulf of Mexico, with the first three seeing plenty of FPSO activity, followed by Mexico and Australia. Deepwater is only one of the many drivers contributing to the growing FPSO market.
New Frontiers
The US Gulf of Mexico, currently saturated with hubs for subsea tiebacks, will soon test out its first FPSO. The level of success
experienced with Cascade and Chinook will likely determine the future of FPSOs in the Gulf of Mexico. Additionally, OPE introduced its Satellite Services Platform, a bowlshaped
FPSO, that is more stable for environments as harsh as the US Gulf of Mexico. This purpose-built vessel does not even
resemble a ship but will serve the same function. Sevan Marine and Petrobras also have roundship FPSO designs. The first roundship FPSO began production last year, designed by
Sevan Marine and operating for Petrobras. Other interesting design concepts have been mentioned, such as a multi-faced FPSO
designed for ice breaking, perfect for arctic conditions. This FPSO concept is a likely contender for the Sakhalin 5 development. Additionally, the first drilling FPSO (FDPSO)
will come online in the middle of 2009 offshore Congo for Murphy Oil. As with other areas of the offshore E&P Industry, the introduction of new technologies figures to significantly
contribute to the continuing growth of the global FPSO market.
Players
It’s interesting to note that 7% of all operators will control 37% of FPSOs covering the period to 2015. These operators include
Petrobras, Total, ExxonMobil, Chevron, and Shell. Shell and Petrobras were pioneers in this development concept, and neither has strayed very far from the tried and true concept. Petrobras alone expects to bring online 14 FPSO between 2008 and 2012. Petrobras leases the majority of their FPSO fleet (FPSO contractors include the likes of Modec, SBM, Bluewater, BW Offshore, Prosafe and Fred Olsen Energy, to name a
few). SBM and Modec make up over 25% of the current leased FPSO fleet. Keppel Shipyard and Jurong are the two shipyards most active in converting and building new FPSOs for contractors. Aker Floating Production, Sevan Marine and Prosafe plan to bring 12 new FPSOs (4 each) into the leased fleet before the end of 2009.
Conclusion
While the appearance and functionality of the FPSO may be changing, and its popularity soaring, it is unlikely this growth will come to a halt anytime soon. This popularity is attributed to large deck areas, relatively short lead times on conversions, and offloading to storage tankers that eliminates the need to install pipeline exports. These cost effective characteristics ensure the global fleet will continue to grow well into the
future.