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Sunday, January 21, 2018

Storage & Power "To Go"

Mobile and cost effective, both FPSO's and floating powerplants are catching on β€” respectively β€” with companies eager to capitalize quickly on promising oil discoveries and developing countries hungry for power Time and money drive business decisions, and it is these two factors primarily responsible for driving a boom in FPSO and power barge contracts.

Time was the prime consideration in Mobil Oil's decision to produce a half million-acre concession offshore Equatorial Guinea in West Africa from a floating production, storage and offloading system (FPSO).

A successful discovery well and two subsequent appraisal wells established the Zafiro field as commercial. Mobil's Equatorial Guinea, Inc. (MEGI) unit initiated a fast-track development program "to get on stream fast and find out what we've got," according to Art Green, MEGI vice president.

Enter Oceaneering Production Systems, a Houston company renowned for its conversions of ships and drilling rigs. After scouring the market, Oceaneering selected 22-year old oil tanker M.T. Swift (incidentally owned by Mobil) for conversion to FPSO Zafiro Producer.

In brief, a FPSO receives raw wellstream fluids from production wells, separates the crude oil from the natural gas and water present in the wellstream, and stores the crude onboard for offloading to shuttle tankers. The natural gas is used for fuel aboard the FPSO, and excess gas is flared. The water is cleansed of residual hydrocarbons before being discharged into the sea.

"FPSO technology is about 20 years old," said Oceaneering's Marketing Manager, Chuck McCabe. "Exxon used an FPSO at its Hondo Field off the coast of California in the 70s and 80s. It was later decommissioned and sold when the company installed a pipeline in the interest of environmental protection. FPSOs got a shot in the arm a few years ago when a Norwegianbuilt tanker proved the viability of a monohull production and storage facility in the harsh environment of the North Sea. They are gaining in popularity there, as well as throughout the world with about 30 FPSOs currently in operation. We estimate as many as 45 will be at work within a few years." As of yet, the concept hasn't had much impact in the Gulf of Mexico on the production side. One reason is that the Gulf already has such an infrastructure of platforms and pipelines in place that there is less need for offshore processing and storage facilities, according to Mr. McCabe. Another reason is that Gulf wells tend to require more frequent workovers, which aren't feasible from tanker-based facilities. "To date, Zafiro Producer, at 268,000 dwt, is by far the largest of the three FPSO conversions to be performed on the Gulf Coast," said Mr. McCabe. "The Ocean Producer, which we did, is 78,00C dwt and the Jamestown, converted by McDermott, is also a relatively small unit." Mobil's timeframe for the field β€” it wanted production by the third quarter of this year β€” could not have been met by building a fixed platform, according to Larry Salz, MEGI's production manager.

"At a guess, installing a fixed platform at this location in 600 ft. (182.9 m) of water would have required about three years," said Mr. Salz. The conversion and mobilization schedule for the Zafiro Producer is 18 months. "Even with such a platform, we would still have needed additional onshore or floating storage capacity. It was never really an option," he added.

The added bonus afforded by the FPSO is its mobility, making it possible to move to another site if, or when, field production declines. The best case scenario for Zafiro Field, according to Mr. Salz, is for five to ten years of production, considerably less than the life expectancy of the FPSO. Then there is the money. Mr. Salz estimated that a fixed platform at that location might have cost $250 to $300 million, compared with $70 million for the conversion and outfitting of the FPSO.

Electric Generating Plants Money in a different context β€” the lack of it β€” has given rise to another maritime hybrid, the barge-mounted electric generating plant.

There is a growing market for electric power in most Third World countries. But, investors are reluctant to risk money on brick-andmortar projects, such as powerplants, in developing countries.

They tend to take comfort, however, in having their investment on a barge, which can be moved to another location in the event of default or other adverse circumstance. "The energy demand of developing countries such as India, Pakistan and much of Latin America is astronomical," said Nauman Ahmad, manager of Finance for Smith Cogeneration of Oklahoma City.

In 1994, Smith put in place one of the world's first, and at that time largest barge-mounted, combinedcycle (gas and steam fueled) generating plants in the Dominican Republic. It currently produces 185 MW of electricity.

"Access to financing is one of several factors which make bargemounted powerplants attractive, but there are others," said Mr. Ahmad. "We can make use of state-of-the-art technology, highquality facilities and skilled workers in the U.S. to build the plant rather than having to depend on available resources on site. And, we can provide power in six to eight months. In the Third World, the need is yesterday." Gregory Snyder, manager of Platform-Mounted Power Plants for Westinghouse, said the technology of generating power by a combination of oil or gas-fueled combustion turbines and steam turbines powered by the heat they produce gave a substantial boost to the business.

"We have contracts for bargemounted powerplants totaling about 1,000 MW," said Mr. Snyder. "That isn't a lot by U.S. standards, but could equal the entire power generating capacity of some small countries." Smith's Dominican Republic plant added nearly 25 percent to the country's actual generating capacity.

More important, it eliminated almost daily power shortages caused by failure of older equipment, according to Donald Smith, president of the Oklahoma firm. Barges to support power generating plants are usually custombuilt, according to Westinghouse's Mr. Snyder. He explained further: "The allowable deflection at the interface of a combustion turbine and its foundation is measured in millimeters, whereas the typical deflection in the deck of a barge would be measured in inches," he said. "It is necessary to isolate the turbine from barge deflection, calling for beefed-up construction to create a suitable foundation." Another player in the power barge industry is a joint venture between Delta Hudson Engineering Corp., a subsidiary of McDermott International, and Stewart and Stevenson, Inc. of Houston.

Ron Greenlay, president of Delta Hudson, said that the joint venture's plan calls for production of "a standardized, simple-cycle (gas or oil-fueled only) plant with a nominal capacity of 80 MW." Two such plants are under construction with negotiations in progress for their sale, he added.

The new plants will employ two LM 6000 gas-fueled turbines, which are essentially derived from jet aircraft engines, manufactured by General Electric. They will be mounted on barges measuring approximately 270 x 80 ft. (82.3 x 24.4 m).

The total cost of the plant will be approximately $48 million, according to Mr. Greenlay.

"We could look at combined cycle cogeneration plants, but our primary focus is on the standardized plant," said Mr. Greenlay. Like others in the power barge business, the joint venture will target Third World applications, and could build floating powerplants speculatively.

"This is a niche business which might also have domestic (U.S.) markets for services such as providing extra power during the revamping of a conventional powerplant or supplementing hydroelectric plants in periods of drought," said Mr. Greenlay.

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