Current trends in the FPSO market

globalFPSO

Welpatega attended the 4th Annual Global FPSO forum in Galveston Texas. It was a great event filled with interesting people hailing from all arenas of industry: FPSO providers, designer engineers, operators, specialists & experts, regulators, and 3rd party contractors. With in depth sessions focusing on everything from mooring integrity and monitoring, to the industry at large, to new developments, to risks, it delivered on it’s promise to be an event where ideas could be discussed and debated at length to illuminate some of the growing concerns for all involved in the FPSO and broader floating market. After mingling and meeting with influential players for 3 days in Galveston Texas there were three clear takeaways that the industry is thinking about at the moment.

FPSO’s are getting bigger, deeper, and more complex.

  • Deep water is the future of oil and gas giving FPSO’s have a competitive advantage over other production methods
  • VLCC’s are being converted more complexly with more topside equipment
  • Service lives are expected to be pushed out 30, 40, 50 years
  • New projects must operate more cleanly than predecessors
  • Smarter systems with more automation will be required

Costs are rising but a competitive market places downward force on price.

  • Competition from: other FPSO providers, other forms of offshore production (TLP, SPAR, Semi-sub, subsea production etc.), other forms of energy
  • Rising prices will send operators towards cheaper solutions when they become technically capable of supporting projects
  • Safety cannot and will not be compromised
  • Capital intensity of the FPSO industry is going in a direction that is not sustainable

Energy reform is impacted by various pressures.

  • Underwriter losses due to misunderstanding of risk exposure (FUMA)
  • Public pressure
  • Local content requirements

Clearly this is a growing and changing industry with FPSO orders predicted to increase 7% in the next five years when compared with the previous five. When we look at these major threads moving through the industry it is easy to see a need for greater understanding of a projects degradation mechanisms, risk, and efficiency. The ability to more accurately predict the future of how a 50 year design life will function could greatly increase a projects planning and viability; and in lieu of this, credible life extension programs.

See you in 2015!

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