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by

James R. McCaul, President

International Maritime Associates, Inc.

IMA has recently completed an in-depth analysis of the floating production sector. The study examines developments in this dynamic, growing market sector and forecasts future requirements for floating production systems. Some highlights are described in this article.

Operating Inventory – The number of floating production systems in service continues to grow. There are now 250 units in operation or available, more than double the number of units ten years ago.

Included in the total are 12 units off field and being remarketed. Eleven of these are FPSOs, one a production semi. The overall utilization rate for available production floaters is 95.2 percent.

FPSOs account for 62 percent of the current production floater inventory. The balance is comprised of production semis (17 percent), tension leg platforms (9 percent), production spars (7 percent), production barges and LNG storage/regasification vessels (5 percent).

Petrobras is clearly the dominant player, with 43 FPSOs in operation or on order, having a combined plant capacity of 5.1 mb/d. CNOOC, ExxonMobil, Total, Chevron, ENI, BP, Shell and Petronas are next in line. These nine field operators account for 61 percent of FPSOs and 72 percent of oil processing capacity installed on FPSOs. 

FPSOs in Service and On Order

 

Orders – Order backlog now stands at 47 units, of which 35 are FPSOs, 6 production semis, 3 tension leg platforms and 3 floating storage/regas units. Purpose-built hulls are being utilized for 24 units, converted tanker hulls for 23 units.

When delivered, new production floaters will increase operating inventory by 20 percent over the next several years.

Almost half of the units on order are being built for use offshore Brazil. Southeast Asia, West Africa, Northern Europe and the GOM are other major destinations for units on order.

Production floaters are currently being built or converted at 28 facilities worldwide. Asia is the major location for fabrication and conversion. But Brazil is becoming an increasingly larger player and is now the second largest fabrication center for floating production systems.

Planned projects – IMA has identified 194 projects in the planning stage that are likely to require a floating production system for development.

Fifty-five of these projects are at the bidding/final design stage, with equipment orders likely over the next 12 to 18 months. Another 139 projects are in the planning/study stage, with orders likely in the 2013 to 2019 timeframe.

Brazil is the most active region for new floater projects. IMA has identified 47 projects in the planning stage in Brazil. Some of these projects involve multiple floating production systems – up to 6 units in one major project. West Africa is the second largest region for planned projects, followed by Southeast Asia, Northern Europe the Gulf of Mexico and Australia/New Zealand.  

Floating Production Projects
in the Planning Stage

Floater order forecast – Overall, IMA expects orders for production floaters to average 24 to 35 units annually over the next five years. Around 80 percent of the units will be FPSOs. Between 15 to 20 percent of the new FPSO projects will be satisfied by redeployment of existing units.

IMA expects about 30 percent of the FPSOs to be large units similar to CLOV, Skarv and P-62. Another 30 percent will be midsize units such as C. Sao Paulo, Kwame Nkruma and Pyrenees Venture. The balance will be small units such as Gimboa, Montara Venture and C de Santos.

Capex thrown off by floater orders is expected to total $80 to 115 billion between 2011 and 2016. The forecast range reflects three potential crude pricing scenarios. The base scenario assumes oil stays in the $90-110 range, a price range the futures market sees most likely over the foreseeable future.

Long term outlook – Future growth indicators in the floating production sector are hugely positive. Global demand for oil continues to grow, the market is again threatened by MENA supply disruptions, oil prices have pierced $100 and virtually every major field operator has announced plans to increase offshore E&D expenditures.

Deepwater fields are among the major sources of hydrocarbons yet to be found or developed. While no one knows the full extent of deepwater potential, the magnitude is undoubtedly huge.

In Brazil alone, deepwater pre-salt resources are estimated at 70 billion barrels of oil equivalent, a figure likely to grow as more finds are confirmed. Some estimates see deepwater resources offshore Brazil, West Africa, elsewhere providing almost 14 million barrels of oil equivalent per day by 2030 – more than double the current contribution to global supply.

Importantly, drill ships and semisubmersible drilling rigs now being built will add 38 percent to available deepwater drilling capacity. A shortage of available rigs has constrained exploration and development. More rigs looking for oil result in greater number of finds – and ultimately greater demand for additional floating production systems.

Overall, growth in the floating production sector has lots of room to run. There are no indications of the market slowing. Rather, demand for new systems is accelerating.
 

The author

James R. McCaul imaassoc@msn.com is president of International Maritime Associates Inc. He established IMA in 1973. Before forming IMA, he was member of the faculty of Webb Institute of Naval Architecture. McCaul holds a PhD in economics from the University of Maryland, an MS in business administration from Pennsylvania State University, and a BS in marine science from the State University of New York.