Number of idle floating production units reaches all-time high

fpso28 November 2013, News Wires – The number of available floating production systems (FPS) worldwide stands at 20, an all-time high for available FPS units, Energy Maritime Associates (EMA) Pte Ltd., reported Tuesday.

A combination of factors contributed to the all-time high in available units, David Boggs, EMA managing director, told Rigzone in an email statement. The main reason for the increase is poor field performance by five units. Four units owned by oil companies are being held for possible redeployment, and assessments are being made on how best to reutilize these assets, if at all.

Four units are being held for resale versus scrapping. While the remaining units are being actively marketed for redeployment opportunities, they may not match field-operator requirements without major modifications, Boggs said, adding that, “Unlike a drilling unit, a floating production system is a bespoke asset, customized to a particular field’s water depth, weather conditions, oil and gas properties, and other factors.”

The units currently available include 16 floating production storage and offloading (FPSO) vessels, three production semisubmersibles and one spar. Nearly half of these units were in operation for 15 years or more, EMA reported in a statement, while another 40 percent were only working for five years or less. Most of these units were prematurely available because the reservoir did not perform as anticipated.

EMA, which has taken over the International Maritime Associates’ (IMA) floating production report, notes that, since IMA’s July report, eight FPSs have become available, lowering the overall utilization rate to 92.8 percent. Another 92 floating storage/offloading units without production capability are in service.

The global FPS fleet currently has 277 units, 62 percent of which are FPSOs. The remaining fleet includes production semis, tension leg platforms (TLP), production spars, production barges and floating regasification/storage units (FSRU).

Nineteen FPSs have been ordered so far this year, including 12 FPSOs, three FSRUs, two TLPs, one spar and one production barge. While this number falls in line with the 17-year average of 19.2 per year, but comes in below EMA’s forecasts.

“A few anticipated contract awards have been delayed or deferred for reasons including cost escalation, reservoir uncertainty and more attractive opportunities – particularly onshore shale oil,” EMA said in a statement.

Reservoir uncertainty was cited by Royal Dutch Shell plc as a factor in deferring the Fram project in the UK North Sea. Dow Jones Newswires reported in February that Shell was reassessing its Fram development plan due to “unexpected wells results”.

“For some companies, when comparing investment opportunities, U.S. onshore unconventional resources do appear more attractive than some floating offshore projects, particularly in terms of risk mitigation,” Boggs told Rigzone. “Often the onshore projects can be staged investments over time, rather than the large one-time commitment necessary for offshore developments.”

Despite project deferrals and delays, the number of potential projects worldwide remains strong, with 220 in the planning stage and 60 in the bidding or final design stage.

The world regions with the most FPSs on order are Brazil, Africa, the Gulf of Mexico, northern Europe and Southeast Asia.

“We expect these to remain the areas of greatest potential,” Boggs commented. “However, in Africa, there are new opportunities in East Africa, and in the Gulf of Mexico, new opportunities are emerging on the Mexican side of the Gulf.”

EMA is also seeing increasing growth in gas systems, such as floating storage and regasification units, floating liquefied natural gas facilities, and gas production barges/FPSOs, Boggs noted.

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– Rigzone

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