Oil companies and their contractors slipped in 2002, but one sector—floating production—managed to stay, well, afloat. And an industry report indicates that the sector will ride a wave of growth in the next few years.

According to The World Floating Production Report, the world's floating production fleet will see its ranks swell, with 134 new floating production systems expected to be installed by 2006. This number is noteworthy considering that in the past 5 years, only 85 floaters have been deployed.

In addition, the annual global expenditure in the sector is expected to well up from an estimated $2.1 billion in 2002 to $8.3 billion in 2006. In fact, the report predicts that the global capex or associated market value of the sector will reach $32 billion.

Why the growth spurt? For one, the trend reflects the industry's dive into deepwater areas. Also, subsea production technologies are becoming more widely used, and marginal oil fields are being exploited to a greater degree. Finally, the fourth factor fueling the sector's growth is the industry's increasing preference for fast-track and/or phased projects.

Indeed, the sector has come a long way from its start in 1975, the year the North Sea Pioneer, a converted semisubmersible drilling rig, was deployed in the UK part of the North Sea. In the early days, floating production units were pioneers of sorts. They were relatively small and utilized in marginal fields where water depth and the questionable availability of oil reserves discouraged the use of costly, conventional fixed platforms.

Now such floating units are more versatile, deployed in many types of offshore projects in diverse environments and water depths. In addition, they have become a cost-effective way of developing both marginal and top-caliber offshore oil fields around the world.

Despite the adverse effect of an oil price drop in the late 1990s, the last decade has seen sizeable increases in the world's floating production fleet. As of second quarter 2002, worldwide installations in the sector's entire history equaled 204, out of which over 130 have been completed and are operational. And 150 projects are on the table for the period to 2006, out of which 134 are expected to be up and running by that year.

Northwest Europe has led the pack in total number of floating production unit deployments. However, through 2006, the Asia-Pacific region and the "Golden Triangle" of Brazil, West Africa and the U.S. Gulf of Mexico are expected to build the most floaters.

Four major types of floating production systems currently comprise the world's fleet: (1) floating production, storage, and offloading vessels (FPSOs); (2) floating production semisubmersibles; (3) tension leg platforms (TLPs); and (4) spars.

FPSOs, which are vessels shaped like ships, are by far the most widely used type of floating production unit, accounting for over 100 deployments globally—more than all the other types combined. And its domination is expected to continue. Of the new installations predicted by 2006, 91 are expected to be FPSOs, 14 floating production semisubmersibles, 15 TLPs, and 14 will likely be spars.

Interestingly, the Gulf of Mexico does not employ FPSOs at all and is the only major producing region in the world not to do so. Several reasons are behind this noticeable absence. For starters, the region has already developed a solid export pipeline infrastructure for transporting production to shore and thus, has little need for the vessels' offshore storage capacity. Also, concerns remain about the units' ability to withstand the region's hurricanes and to avoid harming the environment. Instead, the region's floaters of choice are TLPs and spars.

However, the gulf is being increasingly pressured to deploy FPSOs by the current trend toward deeper waters. Offshore operations are moving farther from shore, possibly up to 350 km, which renders any export infrastructure inaccessible. By 2006, the Gulf of Mexico may finally get acquainted with such vessels.

Whether it deploys such vessels or not, the region will likely account for much of the sector's market growth. Along with Brazil and projected biggest spender West Africa—the world's other major deepwater regions— the Gulf of Mexico is expected to be responsible for 70% of the global market value in the FPS sector by 2006. The Asia-Pacific region may have more projects underway, but its shallow waters and relatively gentle environments allow less expensive units to be deployed.

The World Floating Production Report II 2002-2006 was published in 2002 by energy business consultants, Douglas-Westwood Limited, and offshore data specialists, Infield Systems.

Source: Floating Production Growth Continues into 2003
Dominic Harbinson & Dr. Roger Knight
Offshore, Dec. 2002
http://os.pennnet.com/Articles/Article_Display.cfm?Section=Articles&SubSection=CurrentIssue&ARTICLE_ID=163611&VERSION_NUM=1