What’s New with Floating Production?

By Jim McCaul, International Maritime Associates
Friday, January 10, 2014
Jim McCaul, International Maritime Associates

Currently, 319 oil/gas floating production units are now in service, on order or available for reuse on another field.  FPSOs account for 65% of the existing systems, 75% of systems on order.
Another 24 floating LNG processing systems are in service or on order.  Liquefaction floaters account for 13%, regasification floaters 87%.  No liquefaction units are yet in service – all 3 are on order. Also, 98 floating storage units are in service, on order or available.
Trend in Inventory – The inventory of oil/gas floating production units is 16% greater than five years ago and 67% higher than ten years back.  This comparison includes all units in service, on order and off field – but excludes LNG processing units.  If the latter are included, the growth is 21% and 80% respectively.
Looking at specific type units, the number of FPSOs in operation, on order and available has grown from 116 units in December 2003 to 211 units in December 2013.  The combined total of other oil/gas floating production units has grown from 75 units in December 2003 to 108 units today.
Available Units – 21 production floaters (16 FPSOs, 4 Semis and 1 Spar) have stopped producing and are available for redeployment.  Another 3 production units (all FSRUs) on order do not have a field contract.  In effect, 7% of existing or on order production floaters are looking for a field assignment. Some of these available units are actively for sale.  Some are being retained for use on another field controlled by the current owner.  All require modification and upgrade to be reused.  Depending on the new field, the cost to modify the processing plant, mooring system and refurbish the unit can easily exceed $100 million. 
The record for time off field between deployments is held by the FPSO Falcon.  This VLCC-size FPSO has been available since early 2006 – after only 4 years of use by ExxonMobil off Nigeria.  When ExxonMobil could not find a reuse or buyer, the 2.2 million barrel single hull unit was returned to SBM at end 2009.  It has been laid up in Malaysia since.  Ironically, Falcon was the first of several generic FPSOs that incorporate design features enabling relatively easy reuse on multiple fields.
Another FPSO just delivered to Brazil (OSX 3) could come on the re-sale market.  The field operator (OGX) has financially collapsed and the lenders are looking to protect their position.
Recent Orders – Since the beginning of the year there have been orders for 22 production floaters with a total contract value of ~$17.5 billion.  The orders include 11 FPSOs, 2 TLPs, 1 Spar, 1 Barge, 6 FSRUs and 1 MOPU. 
Here’s what happened in November:
•    EnQuest issued an LOI to Bumi Armada to lease an FPSO for use on the Kraken field in the U.K. sector of the North Sea.  The contract was to be finalized by end November – but to date no news of the final award. 
•    Modec confirmed the EPCI contract + 20 year lease for the MV27 Cidade de Caraguatatuba.  This FPSO is being supplied to Petrobras for use on the Carioca field.
•    An earlier FPSO order became a casualty of rethinking investment decisions.  Hyundai in April had been selected to build the $1.9 million Rosebank FPSO.  But on 22 November Chevron announced that it is not currently economic to proceed with the investment.  As a result the project is back in planning stage with the scope of field development and cost of selected development option under new review.
The pace of production floater orders thus far this year has been running above the long term average.  Over the past 15 years orders have averaged 1.6 units per month.  The order intake pace this year has been averaging ~2.0 units per month.
But the market seems to be hitting resistance.  FPSO orders in particular have been relatively weak.  Over the past five years an average of 15 FPSOs have been ordered annually.  This year orders will not reach this level. 
Backlog of Planned Floater Projects – 231 floating production projects are in various stages of planning as of beginning December.  As shown below, close to 60% entail use of an FPSO. 
Where Planned Projects are Located Brazil is the major location of floating production projects in the planning stage.  We are tracking 50 projects in Brazil – 22% of the visible planned floating production projects worldwide.
Several Brazilian projects will require multiple production units.  Libra could require 12 production units, Jupiter 6 units, Lula 2+ units.  When these large projects are taken into account, Brazil is almost 30% of visible floating production system orders in the planning stage.

Location of Floating
Production Projects

in the Planning Stage
(as of 1 November 2013)

Project Location    # of Projects

Brazil    50
Africa    49
SE Asia    38
No. Europe    22
GOM    20
Aust/NZ    15
Med    12
SW Asia    12
Other    13
Total    231


Planned Projects
by Type Production System Required
(as of 1 November 2013)
Type of System    # of Projects

FPSO    132
Other FPS    35
FLNG    26
FSRU    25
FSO    13
Total    231


Number of Floating Production and Storage Units
In Service, On Order and Off Field/Being Remarketed  (as of December 1, 2013)
    Total    Active    On Order    Off Field
Oil & Gas Processing
FPSO    211    157    38    16
Production Barge    9    8    1    0
Production Semi    48    40    4    4
Production Spar    23    18    4    0
TLP    28    24    4    0
Total    319    247    51    21

LNG Processing
FLNG    3    0    3    0
FSRU    21    9    12    0

Storage Systems
FSO    98    89    8    1

About IMA & Jim McCaul
IMA provides market analysis and strategic planning advice in the marine and offshore sectors. Over 40 years we have performed more than 350 business consulting assignments for 170+ clients in 40+ countries. We have assisted numerous shipbuilders, ship repair yards and manufacturers in forming a a plan of action to penetrate the offshore market.  Our assignments have included advice on acquiring an FPSO contractor, forming an alliance to bid for large FPSO contracts, satisfying local content requirements and targeting unmet requirements through technology development.
Tel: 1 202 333 8501
e: imaassoc@msn.com

(As published in the December 2013 edition of Maritime Reporter & Engineering News - www.marinelink.com)

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