Production ships now dominate the global floating production scene and their market is set to boom to the tune of $34billion of investment over the period 2008 through 2012.
Add in other forms of floating production unit and the anticipated total capex figure will be more than $43billion, according to new research by Douglas Westwood Associates. As of year-end 2007, there were nearly 190 FPSO (floating production storage and offloading vessel) deployments worldwide. That number is set to leap by at least another 120 over the five years 2008-12, with West Africa and Asia projects set to dominate the market for new-builds and tanker conversions.
Western Europe and Latin America have seen the most floater deployments to date and the North Sea is apparently in for a renaissance.
Africa and Asia account for nearly half of the 123 vessels forecast over the 2008-12 period (53), of which 30 are set for African deployment. Latin America is the next most important region with 21 forecast installations, followed by North America (19), Western Europe (17), Australasia (12) and the Middle East (1).
As for the $43billion capex forecast, FPSOs account for the lion’s share at 79% of the forecast figure, of which some will be existing ships put on to new tasks.
In terms of market value, Africa, Asia and Latin America account for 66% of D-W’s forecast global capex, The relatively benign environments and shallow waters in which most of the FPS prospects in Asia are located enable relatively cheaper FPS solutions to be adopted. So, although the region has 26 FPS units forecast for the period, its capex ($7.3billion) is much lower than that forecast for Africa, which has 27 installations planned and a capex of $11.6billion – where new-build solutions and/or higher specification vessels tend to be required.
Of the prospective FPSOs, just over half are expected to be conversions and another third new-builds, with the remaining units likely to be redeployments or without a defined development type as yet.
An active leasing market has emerged in the FPSO segment in particular – about 60% of the world fleet, and more than half of the North Sea fleet, is owned by leasing contractors. In recent years, contractors have also picked up a number of significant project awards based on the deployment of converted vessels – predominantly tankers and semi-submersible drilling rigs. The redeployment of modified/upgraded vessels, especially in the leased FPSO segment, is likely to remain important in meeting the growth in market demand.
D-W notes that there has been a recent trend to speculatively construct generically designed FPSOs, especially by the newer floating production leasing companies such as FPSOcean, Nexus Floating Production, Nortechs FPSO, Rubicon, Sea Production and Sevan Marine. All have vessels which are either under construction, or ready for conversion, with no firm contractual agreements from interested parties, and are the result of the currently perceived shortfall of FPSOs when compared with projects coming forward, some of which are multi-vessel projects, such as Tullow’s Jubilee development offshore Ghana.
Surging interest in liquefaction of natural gas (LNG) and its transportation has recently spawned some innovative floating production concepts. Norwegian-owned company FLEX LNG is a newcomer to the floater marketplace but has already raised interest in its M-FLEX concept, which allows a purpose-built LNG tanker to liquefy natural gas using deck-mounted nitrogen expander liquefaction cycle trains.
FLEX LNG has three vessels on order with Samsung Heavy Industries and has been in discussions with Peak Petroleum Industries of Nigeria, which is considering the concept for its Bilabri and Orobiri fields. FLEX LNG expects the vessels to be producing LNG onsite by 2011.
D-W says its forecast is conservative and that activity within the FPS sector over the period to 2012 could well exceed the levels currently forecast.
Two main reasons are given for this. The first of these relates to the potential for new floater projects to emerge as a result of ongoing exploration activities, of which the Santos Basin offshore Brazil is a case in point, and the second to the lack of a defined development strategy for some known prospects.