MMS preparing for FPSO application for US Gulf

Several in consideration, but Shell-Conoco's Nakika may be first

Jerry Greenberg
Contributing Editor

A number of FPSO designs are considered possible for use in the US Gulf of Mexico by the year 2000, including this illustrated vessel. A loading operation is shown in the background.

Global FPSO units installed, in construction, and planned [220,790 bytes]

With 80 shipshape floating production storage offloading (FPSO) units installed, planned or under construction around the world today, why isn't there an FPSO in the US Gulf of Mexico, the world's largest offshore market? Put simply, there has not yet been a need for such a unit.

Gulf of Mexico operators have handled deepwater production quite well so far with semisubmersibles, tension-leg platforms, spars and subsea completions tied back to host platforms in shallower waters. However, this year may see the first Gulf of Mexico development plan filed that utilizes a shipshape FPSO.

FPSO deployment

There are 45 shipshape floating production, storage, offloading (FPSO) vessels working worldwide today, according to Houston-based Offshore Data Services. Another 19 shipshape FPSOs are under construction or conversion while another 16 such units are planned. These units are in virtually every major oil market: the North Sea, Brazil, West Africa, Southeast Asia, and the Far East. They are situated just about everywhere except the US Gulf of Mexico.

Shipshape FPSO's are in such major areas of the world as the North Sea, with 23 units installed, under construction, or planned. Brazil has three FPSO's installed with 10 additional units under construction or planned, including the deepest installation in 4,659 ft. of water in the Marlim Sul-3 field. Petrobras is also planning an FPSO for installation in 5,000 ft water depths for Phase III of the Albacora field development that is scheduled to be installed later this year.

But FPSOs aren't strictly for deepwater areas. Most of the FPSOs located in the North Sea are in less than 500 ft. of water, with only four of the 23 installed, planned or under construction in more than 1,000 ft of water. By contrast, of the 13 FPSOs installed, planned or under construction for offshore Brazil, 11 are for more than 2,000 ft of water. In fact, only 20 (25%) of the FPSOs installed, planned or under construction around the world are for water depths above 1,000 ft. The shallowest water depth where an FPSO is installed is in 65 ft of water in the Bozhong BZ-34-2 field off China, according to Offshore Data Services. The vessel, Chang Qing Ho, was installed in 1990.

MMS' position

To date, no operator has submitted a plan of development with the Minerals Management Service (MMS) for a project utilizing and FPSO, but that may change soon as the industry moves into deeper and more remote waters away from the pipeline infrastructure in shallower waters.

"We may see an application for use of an FPSO in 6-8 months," predicts Barney Congdon, a spokesperson for the MMS in New Orleans. A full-scale environmental impact statement for a plan of exploration utilizing an FPSO could take up to two years, according to MMS officials.

"We are concerned about not having experience approving or disapproving a plan that would utilize an FPSO," Congdon added. During an industry workshop on FPSOs last year, Chris Oynes, Regional Director of the MMS Gulf of Mexico OCS Regions, made the point: "Do we understand the FPSO technology and scope of operations projected for the Gulf of Mexico enough to be able to determine the level of environmental impacts that will or have the potential to occur?"

For its part, the MMS has been doing quite a bit to get up to speed on FPSOs. It held a workshop in April 1997 where several groups presented information on FPSOs including Aker Maritime, Intec Engineering, and Maritrans. A panel discussion included representatives from Amoco, BHP Petroleum, American Bureau of Shipping, and Bluewater, which operates several FPSOs in the North Sea. Attendees to the workshop included Exxon, EEX, Kerr-McGee, Marathon, Shell, and Texaco. The MMS also made visits to the North Sea and met with Statoil officials, who presented its FPSO experience in the North Sea to MMS representatives.

Industry making case

The MMS and US Coast Guard (USCG) are updating a Memorandum of Understanding (MOU) that, among other items, addresses floating facilities, including FPSOs, for the first time. The MOU outlines each agency's responsibilities. Also, while not mentioning a specific type of production system, the MMS has begun an environmental assessment document on oil and gas operations and activities in the deepwater areas of the Gulf.

The objectives are to identify and evaluate the significance of potential impacts from exploration, development and production operations and from associated support activities and infrastructure. The differences between shallow water and deepwater operations can be significant, and new and evolving technologies, larger and more complex facilities, modifications of procedures, and additional environmental protection issues are all anticipated for deepwater activities, says the MMS. The environmental assessment is scheduled for completion in July 1998.

While the MMS is funding this environmental assessment, the agency says it will not fund studies related specifically to FPSOs. "The MMS will not fund a study," said A. B. Wade with the MMS in Washington, D.C. "We feel it is up to the industry to make its case and fund its own study. We have never employed a tanker for domestic production except on the West Coast. We would proceed with caution, and so the industry would have to make the case about the use of FPSOs."

The MMS has a top 10 list of information needs pertaining to an environmental assessment of FPSOs. These include approaches taken by industry to minimize such impacts including air emissions and oil spill risks. Oil spill response capabilities and contingency plans including response times and constraint on regaining control of a subsea well is another need.

The information needs include:

Industry's plans for assessing environmental risk from unusual ocean currents such as Loop Current eddies and storm events, especially hurricanes
Operator's plans to secure facilities and evacuations when it comes to severe storms and hurricanes
The capability of the facility to survive such extreme storms and resume operations.
Information for handling any gas production and transportation to market, especially any plans that will rely on technologies other than pipeline to shore or to existing structures. This likely includes any gas to liquid technology, which could be useful for FPSOs very far from shore.

Natural gas cannot be flared in the Gulf of Mexico so any gas produced must be reinjected, which could damage the formation, or transported to shore or another facility via pipeline. The question then arises, if a pipeline is necessary for transportation of any gas from the reservoir, why not also lay a line for produced oil? There is significant concern about paraffin buildup and hydrates in a long pipeline.

Several operators are working on gas-to-liquid conversion technology presently. When the technology is developed, it would likely then be a matter of economics whether a gas to liquids system could be made compact enough for installation on an FPSO.

Joint industry project

To help make the industry's case for an FPSO in the Gulf of Mexico, one joint industry project (JIP) begun by Bechtel in Houston and Safetec in Norway is determining the risks associated with the development of an FPSO system in the Gulf of Mexico.

Fifteen participants, including Chevron, Conoco, Mobil, Marathon, Oryx, Pennzoil, Petrobras, Statoil, and Texaco presently fund the project. Three certification agencies are also participating, ABS, BV, and LRS, and three FPSO and component suppliers, including IHC Calland, MODEC, and Quantum Offshore. The MMS and US Coast Guard are participating in the JIP with a special status as observers.

The primary objectives of the JIP are:

Demonstrate acceptability of FPSO risks in the Gulf of Mexico
Identify accidental events and FPSO components with high environmental pollution, loss of life and financial risks
Recommend reasonable (cost effective) measures for reducing risks
Identify safety issues and risk evaluation criteria that can be used by participants in developing their Gulf of Mexico FPSO designs
Recommend work plan for improving the reliability of high risk FPSO components

The current workscope includes the following major tasks:

Base case risk assessment of the Gulf Treasure FPSO, a conceptual design developed by Conoco Shipping for a site in 4,000 ft of water in the Gulf of Mexico. The scope includes preliminary hazard assessment and quantitative risk assessment (QRA).
Risk assessment sensitivity studies for variations from the base case FPSO design and layout
Risk comparison with a semisubmersible based floating production system
Risk comparison between shuttle tanker and pipeline crude oil transportation options
Database development and additional specific studies that will be important for the base case QRA and other risk assessment tasks
Discussion of the life cycle risks

The JIP kicked-off in early March with a symposium and project meeting. The symposium was attended by about 50 people representing 29 companies consisting of operators, FPSO and component suppliers, certifying agencies, and risk assessment contractors. The JIP is scheduled to be completed before the end of the year.

The American Bureau of Shipping (ABS) was considering beginning its own JIP to study the safety and regulatory issues of FPSOs, however, the ABS ultimately joined with the Bechtel-led JIP.

Minimal oil spills

Environmental concerns over FPSOs in the Gulf appear to be near if not at the top of concerns. As one observer mentioned: "To some, FPSOs look like and smell like a tanker." Joe Key with Intec Engineering says: "It relates back to being gun-shy because of the Exxon Valdez. "Certainly, no one wants another Exxon Valdez incident, but the safety record of tankers in the Gulf of Mexico, whether lightering vessels or otherwise, is good.

"Here in the Gulf of Mexico, there are numerous tankers of FPSO size trading and offloading without difficulty," says Peter Lovie with Bluewater Offshore Production Systems, which operates several FPSOs in the North Sea. "Twelve to 15 tankers are continuously employed in the Gulf of Mexico in lightering trips between the larger tankers at one of the nine offshore lightering and discharge points. Despite the extent and hazard of these operations, which many in the industry would maintain is much more hazardous than FPSO operations, lightering in the Gulf Coast continues successfully, day in and day out."

In a technical presentation to be made at the 1998 Offshore Technology Conference (OTC), Key addresses oil spill safety among the FPSO population. In the paper, "Reliability of Tanker Based FPSOs for Deepwater Fields," Key mentions that the industry has several hundred cumulative years of FPSO and FSO experience. Data supplied by several FPSO and FSO operators regarding the throughput and oil spills from their past or currently operating units include more than one hundred cumulative years of experience and totaled more than 1 billion barrels of production.

A total of 172 oil spills were reported, according to Key, including one spill that was 4,725 bbl. Of the other 171 spills reported, none were greater than 200 bbl, with a total of only 425 bbl compared to a throughput of 1.75 billion bbl. This translates into the reported oil spills being only 0.00029 percent of the throughput for all spills or, put another way, 2.9 bbl of oil spilled per million bbl of throughput.

Additional issues

?Other concerns in addition to environmental issues involving FPSOs include structural and fatigue considerations of the FPSO. Also, issues surrounding mooring need to be delineated. Does an operator choose dynamic positioning, permanent mooring or a disconnectable mooring system? During a severe storm or hurricane the field likely would be shut in, but it would be up to the operator whether to evacuate the FPSO.

There could be greater risk to personnel during the evacuation process. Additionally, the FPSO could be designed with a passive system that would operate temporarily without personnel. Also, safety and economics of the field would likely be considered when determining whether to evacuate all personnel.

Risk comparison of shuttle tanker versus pipeline should be examined. For example, a 150-mile, 36-inch pipeline contains 1 million barrels of oil, about the same amount of storage on a large FPSO. But which is safer? Also, shuttle tanker availability may be an issue since the vessels will come under the Jones Act and will have to be US flagged. The FPSO, which would not normally move off location, could be foreign flagged.

The USCG is on record requiring double hulls on FPSO's in the Gulf of Mexico. Regulations implementing the Oil Pollution Act of 1990 (OPA 90) provides some flexibility regarding double hull requirements, depending upon the amount of oil being transferred and the distance from shore. The USCG may consider some statutory relief from double hull requirements. The International Maritime Organization (IMO) for now exempts FPSOs from being double hull.

Finally, perhaps one of the greatest risks is collision between a shuttle tanker and the FPSO. Different qualifications of the master of each vessel may contribute to this potential problem. Mitigation techniques that might include interception vessels or standby vessels might be reviewed.

While there are still many questions and potential risks to be answered and addressed, the oil industry has always performed its job with the highest responsibility and safety of the environment and personnel. Shell and partner Amoco, in considering development schemes for their Nakika field (formerly referred to as the AFK field) covering several blocks in the Mississippi Canyon area, are said to be looking at a tanker based floating production system.

Although there would be no storage or offloading capabilities, if approved by the partners and the MMS, it would still be the first shipshape production system in the US Gulf. And it could pave the way for future applications for shipshape FPSOs.