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Floating Production SmokingEverything Off the Water

The offshore oil and gasi n d u s t r y h a s b e e nthrough a difficult threeyear period as the finan-

cial crisis rocked the globaleconomy. Indeed, the freezingof the capital markets and pre-cipitous decline in commodityprices severely constrained oilcompanies exploration and pro-duction (E&P) operations andsubsequently the offshore in-dustry went through a signifi-cant cooling period.

Like the wider industry, thefloating production market wasadversely affected during this pe-riod with capital spend decreas-ing year-on-year from a high ofUS$8.5bn in 2006 to a low ofUS$5.6bn in 2009. However, theseheadline figures hide the intrica-

cies associated with the sub-sec-tors of the floating productionmarket. Indeed, deepwater devel-opments have largely progressedin accordance with operatortime schedules; whilst smaller,shallow water projects, often un-der the operation of independ-ent oil companies with morerestricted access to capital, wit-nessed a relatively higher propor-tion of delays and cancellations.

What is the appeal of this tech-nology and how has it developed?

MilestonesA floating production, storage

and offloading (FPSO) unit is afloating vessel used by the off-shore industry for the processingof hydrocarbons and for storageof oil. A FPSO vessel is designedto receive hydrocarbons producedfrom nearby platforms or subseatemplate, process them, and storeoil until it can be offloaded onto atanker or transported through apipeline. FPSOs are preferred infrontier offshore regions as theyare easy to install, and do not re-quire a local pipeline infrastruc-ture to export oil. FPSOs can be aconversion of an oil tanker or can

be a vessel built specially for the

application. A vessel used only tostore oil (without processing it) isreferred to as a floating storageand offloading vessel (FSO).

The first oil FPSO was the ShellCastellon, built in Spain in 1977.

The Sanha LPG FPSO operatesoffshore Angola, and is the firstsuch vessel with completeonboard liquefied petroleum gasprocessing and export facilities.It can store up to 135,000 cubic

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With E&P moving increasingly more into deeper waters and the natural gas sectorwaiting to be revolutionised by floating LNG (FLNG) floating production is seen as thekey vehicle to meet demands. This report will provide a brief description of FPSOsand their performance.

In just one decade the rig countfor floating production units op-erating worldwide has doubled to250. This is partially due to the factthat floating production technol-ogy is tailor-made for deepwaterE&P, which is fast-gaining mo-mentum, as well as the FLNG con-cept which is set to change thenatural gas sector.

South-east Asia alone currentlyaccounts for 33 of the projects inthe pipeline, while Brazils vastultra-deepwater reserves accountfor 47, providing many opportu-nities for this technology to ad-vance even further.

T h e c o n t i n u e d E & P o f deepwater acreage is providinga robust foundation for long-termgrowth in the FPSO sector.Moreover, industry players con-

tinue to develop remote oil andgas fields that demand hydro-carbon storage. However, it isalso important to note that float-ing production systems continueto be deployed in mature oil andgas basins in relatively shallowwaters. The cost savings associ-ated with the redeployment ofFPSOs in regions such as the UKNorth Sea is also driving themarket forward.

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pability for oil or gas processing.Most FSOs are old single hull

supertankers that have been con-verted. An example is Knock Ne-vis, ex Seawise Giant, was for longtime worlds largest ship, whichhad been converted to an FSO to

be used offshore Qatar.At the other end of the LNG

logistics chain, where the naturalgas is brought back to ambienttemperature and pressure, shipsmay also be used as FSRUs. ALNG float ing storage and

regasification unit (FSRU) is afloating storage and regasificationsystem, which receives liquefiednatural gas (LNG) from offloadingLNG carriers, and the onboardregasification system providesnatural gas send-out throughflexible risers and pipeline toshore. Mooring systems for FSO,FPSO & FSU units are availablein market which allow the vesselto be moored on a ice sheet. Icesheet used for mooring this casemay be located below the icesheet under water.

The FPSO operating in the deep-est water depth is the FPSO BWPioneer from BW Offshore oper-ated on behalf of Petrobras Ameri-cas INC.. The FPSO is moored ata depth of 2,600 m in Block 249Walker Ridge in the US GoMand is rated for 100,000 bbl/d

(16,000 m3

/d). The EPCI contractwas awarded in October 2007 andfirst oil is planned for 3rd Q 2011.The FPSO conversions were doneat Keppel Shipyard Tuas in Sin-gapore and the topsides werefabricated in modules at variousinternational vendors. The FPSOhas a disconnectable turret (APL).The vessel can disconnect for hur-ricanes and reconnect with mini-mal down time.

meters of LPG while awaitingexport tankers for offloading.

In the opposite (discharge andregasification) end of the LNGchain, the first ever conversionof an LNG carrier (Golar LNGowned Moss type LNG carrier)into an LNG floating storage andregasification unit was carriedout in 2007 by Keppel shipyard inSingapore.An LNG FPSO worksunder the same principles an oilFPSO works under, taking the wellstream and separating out the

natural gas (primarily methaneand ethane) and producing LNG,which is stored and offloaded. On

July 29, 2009, Shell and Samsungannounced an agreement to buildup to 10 LNG FPSOs: AlreadyFlex LNG has four contracts forsmaller units at the same yard.

On May 20 2011, Royal DutchShell announced the planned de-velopment of a Floating LiquefiedNatural Gas (FLNG) facility, whichwill be situated 200km off the coastof Western Australia and is duefor completion in around 2017.When it is finished, this will be thelargest floating offshore facility. Itwill measure around 488m longand 74m wide, and when fully

ballasted will weigh 600,000tonnes. It will have a total storagecapacity of 436,000 cubic metres ofLNG, plus LPG condensate.

While most FPSOs are ship-shaped, some FPSOs have a semi-submersible type hull with storageor have a cylindrical hull. The in-herent symmetry of these FPSOconfigurations makes turrets un-necessary, so the platforms remainin a fixed orientation.

An FPSO has the capability tocarry out some form of separationprocess. If the unit does not havesuch facilities, it is generally re-

ferred to as a Floating Storage andOffloading unit (see below), and

would be operated in conjunctionwith a production platform. Proc-ess plant on FPSO is a core compo-nent on facility and forms a keypart of production process. Pro-duction is usually conducted in 3phases:

1 Separation of Gas.2 Separation of Water.3 Separation of oil.Gas recovered/separated dur-

ing production may be used as

fuel on Marine energy resourceunits ( MRU) fitted on board. Gasmay be flared off in some cases ifMRU is not fitted. Water separa-tion may be carried out usingDehydrators or Hydro Cyclones

The AppealFloating production, storage and

offloading vessels are particularlyeffective in remote or deepwaterlocations where seabed pipelinesare not cost effective. FPSOs elimi-nate the need to lay expensivelong-distance pipelines from theoil well to an onshore terminal.They can also be used economi-cally in smaller oil fields whichcan be exhausted in a few yearsand do not justify the expense ofinstalling a pipeline. Once the fieldis depleted, the FPSO can bemoved to a new location. In areas

of the world subject to cyclones(northwestern Australia) or ice-bergs (Canada), some FPSOs areable to release their mooring/riserturret and steam away to safety inan emergency. The turret sinks

beneath the waves and can be re-connected later.

A f l o a t i n g s t o r a g e a n doffloading unit (FSO) is a float-ing storage device, which is asimplified FPSO without the ca-

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The worlds largest FPSO isthe Kizomba A, with a storage

capacity of 2.2 million barrels(350,000 m3). Built at a cost ofover US$800 million by HyundaiHeavy Industries in Ulsan, Ko-rea, it is operated by Esso Explo-ration Angola (ExxonMobil).Located in 1200 meters (3,940 ft)of water at Deepwater block 200statute miles (320 km) offshore inthe Atlantic Ocean from Angola,Central Africa, it weighs 81,000tonnes and is 285 meters long,

63 meters wide, and 32 meters high(935 ft by 207 ft (63 m) by 105 ft).

The first FSO in the Gulf ofMexico, The FSO TaKuntah, has

been in operation since August1998. The FSO is under a serviceagreement with PEMEX Explora-tion and Production. MODECowns and operates the FSO. TheFSO TaKuntah was installed aspart of the Cantarell Field Devel-opment in the Gulf of Mexico. Thefield is located in the Bay ofCampeche, offshore MexicosYucatan peninsula. The FSOTaKuntah is a converted ULCCtanker with a SOFEC external tur-ret mooring system, two flexiblerisers connected in a lazy-S con-figuration between the turret anda pipeline end manifold (PLEM)on the seabed, and a uniqueoffloading system. The FSO is de-

signed to handle 800,000 bbl/d(130,000 m3/d) with no allowancefor downtime.

The worlds smallest FPSO isthe Crystal Ocean, operating in137 m of water in the Bass Strait

between Australia and Tasmaniaon the Basker Manta Field. It isleased by Roc Oil (Sydney-basedinternational petroleum explora-tion and production company)from Rubicon Offshore and is op-

erated on their behalf by AGR AsiaPacific; it is currently producing

5,000 bbl/d (790 m3/d).The FPSO in the shallowest wa-ter depth of just 13 m is the Ar-mada Perkasa in the Okoro fieldin Nigeria, West Africa, for AfrenEnergy. This spread moored(fixed orientation) vessel uses100 mm, 150 mm and 200 mm

bore DeepFlex non-steel flexiblerisers in a double lazy wave for-mation (with weights and distrib-uted buoyancy) to accommodate

the large motion offsets in anenvironment of extreme wavesand currents.

The Skarv FPSO, developedand engineered by Aker Solu-tions for BP Norge, will be themost advanced and largest FPSOdeployed in the Norwegian Sea,offshore Mid Norway. Skarv is agas condensate and oil field de-velopment. The developmentwill tie in five sub-sea templates,and the FPSO has capacity toinclude several smaller wellsnearby in the future. The processplant on the vessel can handleabout 19,000,000 cubic metres perday (670,000,000 cu ft/d) of gasand 13,500 cubic metres per day(480,000 cu ft/d). An 80 km gasexport pipe will tie in to sgardtransport system. Aker Solutionsdeveloped the front-end design

for the new floating productionfacility as well as the overall sys-tem design for the field andpreparation for procurementand project management of thetotal field development. The hullis an Aker Solutions proprietaryTentechtm975 design. BP alsoselected Aker Solutions to per-form the detail engineering,procurement and constructionmanagement assistance (EPcma)

for the Skarv field development.The EPcma contract covers de-

tail engineering and procure-ment work for the FPSO topsidesas well as construction manage-ment assistance to BP includinghull and topside facilities. Theproduction start for the field isscheduled for August 2011. BPawarded the contract for fabrica-tion of the Skarv FPSO hull toSamsung Heavy Industries inSouth Korea and the Turret con-tract to SBM. The FPSO has a

length of 292m, breadth of 50.6mand is 29m deep and accommo-date 100 people in single cabins.In July 2011, Shell announced theworlds largest FPSO, scheduledto come on stream in 2017.

LNG Supporting theFPSO Sector

With rapidly growing indus-tries, and thus huge demands forenergy sources, Asia is one of themost important proponents ofLNG.

Companies are now being com-missioned to create FPSOs forLNG, with Samsung Heavy In-dustries signing a deal with RoyalDutch Shell for a vessel, which isdue to begin construction next yearand be delivered by 2016. A con-tract signed in 2009 between thetwo companies will see Samsung

supply Shell with LNG FPSOs ex-clusively for the next 15 years.Daewoo also announced in late

2010 it is to construct a LNG FPSOfor a Papua New Guinea project,

becoming only the second in theworld to sign a high-end contractof this nature. Building is due to

be completed in 2014 and will takeplace in the Geoje shipyard inSouth Korea, signalling Asiasgrowing expertise in the sector.

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Maersks Peregrino, which hasrecently been deployed in Bra-

zils deepwater Campos basin,has significant levels of Asian in-put, with engineering taking placein Singapore and India, process-ing facilities supplied by variousSouth-east Asian countries, proc-ess modules being built in Indo-nesia and final integration takingplace in Singapore.

The FutureInfield Systems forecasts the

majority of future floating pro-duction Capex to be directed to-wards FPSO installations over theforthcoming five year period, ac-counting for 62% of total sectorspend. Following FPSOs, semi-submersibles are forecast to ac-count for 18% of industry Capex,TLPs for 11%, other floaters for 6%and spar style platforms for 2% oftotal spend.

The Africa and Latin Americaregions, specifically Angola, Ni-geria and Brazil, continue to be theprimary driving force behind float-ing production Capex. However,Infield Systems notes significantgrowth in other regions and coun-tries. For example Australasianspend is expected to grow from2011 onwards as operators de-velop the large floating structuresrequired for projects such as

Ichthys and Prelude. Europeanspend is also expected to growrobustly over the same period largely driven by projects in theNorth Sea, including Skarv, Goliat,Schiehallion, Quad 204 and thepossible Rosebank FPSO.

The number of projects with afirm status has increased from ourprevious forecasts on the back ofimproved market fundamentals.In Infield Systems 2010 floating

production outlook a total of 67projects were either under devel-

opment or considered firm (pro-gressed through final investmentdecision). Today this figure hasrisen to 91, clearly indicating theincreased strength of the floatingproduction market and the poten-tial opportunities for offshore oiland gas contractors going forward.

Latin America will account forhalf of the projected floating pro-duction Capex over the next fiveyears according to a new Doug-

las-Westwood report. DW direc-tor Steve Robertson commented,The dominance of this region islargely due to local Brazilian op-erators Petrobras and OGX plansto massively increase their fleetsof floating production systems. Akey driver is Petrobrass multi-FPS developments in its pre-saltfields in the Campos and Santos

basins. We forecast that LatinAmerican Capex for the 2012-2016period will total $34bn, with 50FPS deployments, a huge growthon the $12.5bn spent during theprevious five-years.

Douglas-Westwoods latest edi-tion of the World Floating Pro-duction Market Forecast detailsthe considerable opportunities inthe sector, examines the commer-cial, economic and geographicalfactors of influence and forecasts

a total of 134 installations overthe 2012-2016 period, represent-ing a global Capex of $68bn.

The deepwater basins off WestAfrica, Brazil and in the US Gulf ofMexico have become establishedas the focus areas for FPS develop-ments. Africa is the second mostimportant region, although onlyaccounting for 18% of forecastspend, compared to 50% for LatinAmerica. Like Latin America, a

large proportion of the Africaninstallations will take place in

deepwater. North Americanspend from 2012-2016 is muted,with less activity forecast than forAsia or Western Europe, he said.

Douglas-Westwoods forecastof total global installations repre-sent a 37% increase on the 2007-2011 period (when there were 98)and a corresponding increase of81% in expenditure, noted LucyMiller, the lead author of the re-port. The disparity between the

two percentages is a reflection offactors such as a larger proportionof newbuilds and conversionscompared to redeployments, agreater degree of local content rais-ing the cost of relevant equipmentand services and cost inflation.

FPSOs will continue to domi-nate the sector, with 81% of fore-cast global FPS spend. For thefirst time, our forecasts include a

breakdown of FPS by componentand associated spend. Expendi-ture on the hull is a considerableproportion of Capex on average25% of an FPSO and around 35%for other FPS types.

The bottom line is that sectoris set for massive growth, sheconcluded.

With such outlook by marketanalysts it is quite clear that bar-ring a catastrophe, or staggering

technology developments per-taining to deepwater E&P andLNG, the future is rosy for thefloating production sector.

ReferencesDouglas-WestwoodInfield Systems LimitedOil & Gas IQRigzoneWikipediaKeppel Corporation PET