Floating Production Smoking Everything Off the Water

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

R E P O R T
Floating Production Feature CIA 2005

he offshore oil and gas industry has been through a difficult three year period as the financial crisis rocked the global economy. Indeed, the freezing of the capital markets and precipitous decline in commodity prices severely constrained oil companies exploration and production (E&P) operations and subsequently the offshore industry went through a significant cooling period. Like the wider industry, the floating production market was adversely affected during this period with capital spend decreasing year-on-year from a high of US$8.5bn in 2006 to a low of US$5.6bn in 2009. However, these headline figures hide the intricacies associated with the sub-sectors of the floating production market. Indeed, deepwater developments have largely progressed in accordance with operator time schedules; whilst smaller, shallow water projects, often under the operation of independent oil companies with more restricted access to capital, witnessed a relatively higher proportion of delays and cancellations.

In just one decade the rig count for floating production units operating worldwide has doubled to 250. This is partially due to the fact that floating production technology is tailor-made for deepwater E&P, which is fast-gaining momentum, as well as the FLNG concept which is set to change the natural gas sector. South-east Asia alone currently accounts for 33 of the projects in the pipeline, while Brazils vast ultra-deepwater reserves account for 47, providing many opportunities for this technology to advance even further. The continued E&P of deepwater acreage is providing a robust foundation for long-term growth in the FPSO sector. Moreover, industry players continue to develop remote oil and gas fields that demand hydrocarbon storage. However, it is also important to note that floating production systems continue to be deployed in mature oil and gas basins in relatively shallow waters. The cost savings associated with the redeployment of FPSOs in regions such as the UK North Sea is also driving the market forward.

What is the appeal of this technology and how has it developed?

Milestones
A floating production, storage and offloading (FPSO) unit is a floating vessel used by the offshore industry for the processing of hydrocarbons and for storage of oil. A FPSO vessel is designed to receive hydrocarbons produced from nearby platforms or subsea template, process them, and store oil until it can be offloaded onto a tanker or transported through a pipeline. FPSOs are preferred in frontier offshore regions as they are easy to install, and do not require a local pipeline infrastructure to export oil. FPSOs can be a conversion of an oil tanker or can be a vessel built specially for the application. A vessel used only to store oil (without processing it) is referred to as a floating storage and offloading vessel (FSO). The first oil FPSO was the Shell Castellon, built in Spain in 1977. The Sanha LPG FPSO operates offshore Angola, and is the first such vessel with complete onboard liquefied petroleum gas processing and export facilities. It can store up to 135,000 cubic

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meters of LPG while awaiting export tankers for offloading. In the opposite (discharge and regasification) end of the LNG chain, the first ever conversion of an LNG carrier (Golar LNG owned Moss type LNG carrier) into an LNG floating storage and regasification unit was carried out in 2007 by Keppel shipyard in Singapore. An LNG FPSO works under the same principles an oil FPSO works under, taking the well stream and separating out the natural gas (primarily methane and ethane) and producing LNG, which is stored and offloaded. On July 29, 2009, Shell and Samsung announced an agreement to build up to 10 LNG FPSOs: Already Flex LNG has four contracts for smaller units at the same yard. On May 20 2011, Royal Dutch Shell announced the planned development of a Floating Liquefied Natural Gas (FLNG) facility, which will be situated 200km off the coast of Western Australia and is due for completion in around 2017. When it is finished, this will be the largest floating offshore facility. It will measure around 488m long and 74m wide, and when fully ballasted will weigh 600,000 tonnes. It will have a total storage capacity of 436,000 cubic metres of LNG, plus LPG condensate. While most FPSOs are shipshaped, some FPSOs have a semisubmersible type hull with storage or have a cylindrical hull. The inherent symmetry of these FPSO configurations makes turrets unnecessary, so the platforms remain in a fixed orientation. An FPSO has the capability to carry out some form of separation process. If the unit does not have such facilities, it is generally re-

ferred to as a Floating Storage and Offloading unit (see below), and would be operated in conjunction with a production platform. Process plant on FPSO is a core component on facility and forms a key part of production process. Production is usually conducted in 3 phases: 1 Separation of Gas. 2 Separation of Water. 3 Separation of oil. Gas recovered/separated during production may be used as fuel on Marine energy resource units ( MRU) fitted on board. Gas may be flared off in some cases if MRU is not fitted. Water separation may be carried out using Dehydrators or Hydro Cyclones

The Appeal
Floating production, storage and offloading vessels are particularly effective in remote or deepwater locations where seabed pipelines are not cost effective. FPSOs eliminate the need to lay expensive long-distance pipelines from the oil well to an onshore terminal. They can also be used economically in smaller oil fields which can be exhausted in a few years and do not justify the expense of installing a pipeline. Once the field is depleted, the FPSO can be moved to a new location. In areas of the world subject to cyclones (northwestern Australia) or icebergs (Canada), some FPSOs are able to release their mooring/riser turret and steam away to safety in an emergency. The turret sinks beneath the waves and can be reconnected later. A floating storage and offloading unit (FSO) is a floating storage device, which is a simplified FPSO without the ca-

pability for oil or gas processing. Most FSOs are old single hull supertankers that have been converted. An example is Knock Nevis, ex Seawise Giant, was for long time worlds largest ship, which had been converted to an FSO to be used offshore Qatar. At the other end of the LNG logistics chain, where the natural gas is brought back to ambient temperature and pressure, ships may also be used as FSRUs. A LNG floating storage and regasification unit (FSRU) is a floating storage and regasification system, which receives liquefied natural gas (LNG) from offloading LNG carriers, and the onboard regasification system provides natural gas send-out through flexible risers and pipeline to shore. Mooring systems for FSO, FPSO & FSU units are available in market which allow the vessel to be moored on a ice sheet. Ice sheet used for mooring this case may be located below the ice sheet under water. The FPSO operating in the deepest water depth is the FPSO BW Pioneer from BW Offshore operated on behalf of Petrobras Americas INC.. The FPSO is moored at a depth of 2,600 m in Block 249 Walker Ridge in the US GoM and is rated for 100,000 bbl/d (16,000 m3/d). The EPCI contract was awarded in October 2007 and first oil is planned for 3rd Q 2011. The FPSO conversions were done at Keppel Shipyard Tuas in Singapore and the topsides were fabricated in modules at various international vendors. The FPSO has a disconnectable turret (APL). The vessel can disconnect for hurricanes and reconnect with minimal down time.

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The worlds largest FPSO is the Kizomba A, with a storage capacity of 2.2 million barrels (350,000 m3). Built at a cost of over US$800 million by Hyundai Heavy Industries in Ulsan, Korea, it is operated by Esso Exploration Angola (ExxonMobil). Located in 1200 meters (3,940 ft) of water at Deepwater block 200 statute miles (320 km) offshore in the Atlantic Ocean from Angola, Central Africa, it weighs 81,000 tonnes 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 of Mexico, The FSO TaKuntah, has been in operation since August 1998. The FSO is under a service agreement with PEMEX Exploration and Production. MODEC owns and operates the FSO. The FSO TaKuntah was installed as part of the Cantarell Field Development in the Gulf of Mexico. The field is located in the Bay of Campeche, offshore Mexicos Yucatan peninsula. The FSO TaKuntah is a converted ULCC tanker with a SOFEC external turret mooring system, two flexible risers connected in a lazy-S configuration between the turret and a pipeline end manifold (PLEM) on the seabed, and a unique offloading system. The FSO is designed to handle 800,000 bbl/d (130,000 m3/d) with no allowance for downtime. The worlds smallest FPSO is the Crystal Ocean, operating in 137 m of water in the Bass Strait between Australia and Tasmania on the Basker Manta Field. It is leased by Roc Oil (Sydney-based international petroleum exploration and production company) from Rubicon Offshore and is op-

erated on their behalf by AGR Asia Pacific; it is currently producing 5,000 bbl/d (790 m3/d). The FPSO in the shallowest water depth of just 13 m is the Armada Perkasa in the Okoro field in Nigeria, West Africa, for Afren Energy. This spread moored (fixed orientation) vessel uses 100 mm, 150 mm and 200 mm bore DeepFlex non-steel flexible risers in a double lazy wave formation (with weights and distributed buoyancy) to accommodate the large motion offsets in an environment of extreme waves and currents. The Skarv FPSO, developed and engineered by Aker Solutions for BP Norge, will be the most advanced and largest FPSO deployed in the Norwegian Sea, offshore Mid Norway. Skarv is a gas condensate and oil field development. The development will tie in five sub-sea templates, and the FPSO has capacity to include several smaller wells nearby in the future. The process plant on the vessel can handle about 19,000,000 cubic metres per day (670,000,000 cu ft/d) of gas and 13,500 cubic metres per day (480,000 cu ft/d). An 80 km gas export pipe will tie in to sgard transport system. Aker Solutions developed the front-end design for the new floating production facility as well as the overall system design for the field and preparation for procurement and project management of the total field development. The hull is an Aker Solutions proprietary Tentechtm975 design. BP also selected Aker Solutions to perform the detail engineering, procurement and construction management assistance (EPcma)

for the Skarv field development. The EPcma contract covers detail engineering and procurement work for the FPSO topsides as well as construction management assistance to BP including hull and topside facilities. The production start for the field is scheduled for August 2011. BP awarded the contract for fabrication of the Skarv FPSO hull to Samsung Heavy Industries in South Korea and the Turret contract to SBM. The FPSO has a length of 292m, breadth of 50.6m and is 29m deep and accommodate 100 people in single cabins. In July 2011, Shell announced the worlds largest FPSO, scheduled to come on stream in 2017.

LNG Supporting the FPSO Sector

With rapidly growing industries, and thus huge demands for energy sources, Asia is one of the most important proponents of LNG. Companies are now being commissioned to create FPSOs for LNG, with Samsung Heavy Industries signing a deal with Royal Dutch Shell for a vessel, which is due to begin construction next year and be delivered by 2016. A contract signed in 2009 between the two companies will see Samsung supply Shell with LNG FPSOs exclusively for the next 15 years. Daewoo also announced in late 2010 it is to construct a LNG FPSO for a Papua New Guinea project, becoming only the second in the world to sign a high-end contract of this nature. Building is due to be completed in 2014 and will take place in the Geoje shipyard in South Korea, signalling Asias growing expertise in the sector.

Floating Production Feature

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Maersks Peregrino, which has recently been deployed in Brazils deepwater Campos basin, has significant levels of Asian input, with engineering taking place in Singapore and India, processing facilities supplied by various South-east Asian countries, process modules being built in Indonesia and final integration taking place in Singapore.

The Future
Infield Systems forecasts the majority of future floating production Capex to be directed towards FPSO installations over the forthcoming five year period, accounting for 62% of total sector spend. Following FPSOs, semisubmersibles are forecast to account for 18% of industry Capex, TLPs for 11%, other floaters for 6% and spar style platforms for 2% of total spend. The Africa and Latin America regions, specifically Angola, Nigeria and Brazil, continue to be the primary driving force behind floating production Capex. However, Infield Systems notes significant growth in other regions and countries. For example Australasian spend is expected to grow from 2011 onwards as operators develop the large floating structures required for projects such as Ichthys and Prelude. European spend is also expected to grow robustly over the same period largely driven by projects in the North Sea, including Skarv, Goliat, Schiehallion, Quad 204 and the possible Rosebank FPSO. The number of projects with a firm status has increased from our previous forecasts on the back of improved market fundamentals. In Infield Systems 2010 floating

production outlook a total of 67 projects were either under development or considered firm (progressed through final investment decision). Today this figure has risen to 91, clearly indicating the increased strength of the floating production market and the potential opportunities for offshore oil and gas contractors going forward. Latin America will account for half of the projected floating production Capex over the next five years according to a new Douglas-Westwood report. DW director Steve Robertson commented, The dominance of this region is largely due to local Brazilian operators Petrobras and OGX plans to massively increase their fleets of floating production systems. A key driver is Petrobrass multiFPS developments in its pre-salt fields in the Campos and Santos basins. We forecast that Latin American Capex for the 2012-2016 period will total $34bn, with 50 FPS deployments, a huge growth on the $12.5bn spent during the previous five-years. Douglas-Westwoods latest edition of the World Floating Production Market Forecast details the considerable opportunities in the sector, examines the commercial, economic and geographical factors of influence and forecasts a total of 134 installations over the 2012-2016 period, representing a global Capex of $68bn. The deepwater basins off West Africa, Brazil and in the US Gulf of Mexico have become established as the focus areas for FPS developments. Africa is the second most important region, although only accounting for 18% of forecast spend, compared to 50% for Latin America. Like Latin America, a

large proportion of the African installations will take place in deepwater. North American spend from 2012-2016 is muted, with less activity forecast than for Asia or Western Europe, he said. Douglas-Westwoods forecast of total global installations represent a 37% increase on the 20072011 period (when there were 98) and a corresponding increase of 81% in expenditure, noted Lucy Miller, the lead author of the report. The disparity between the two percentages is a reflection of factors such as a larger proportion of newbuilds and conversions compared to redeployments, a greater degree of local content raising the cost of relevant equipment and services and cost inflation. FPSOs will continue to dominate the sector, with 81% of forecast global FPS spend. For the first time, our forecasts include a breakdown of FPS by component and associated spend. Expenditure on the hull is a considerable proportion of Capex on average 25% of an FPSO and around 35% for other FPS types. The bottom line is that sector is set for massive growth, she concluded. With such outlook by market analysts it is quite clear that barring a catastrophe, or staggering technology developments pertaining to deepwater E&P and LNG, the future is rosy for the floating production sector.

References
Douglas-Westwood Infield Systems Limited Oil & Gas IQ Rigzone Wikipedia Keppel Corporation

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