FLOATING PRODUCTION: Study shows $42 billion market for floating production systems

The next five years could see 123 floating production systems (FPSs) of various types coming onstream with a newbuild value of $42 billion. A report by oil and marine business analysts Douglas-Westwood and offshore field data specialists Infield Systems expects the annual value of the market to grow from an estimated $5.9 billion in 2001 to $10.9 billion in 2005.

The report forecasts that 80% of future expenditure will be on floating production, storage, and offloading (FPSO) units. Africa will grow into the largest market, with a total value of $11.6 billion, followed by Latin America (Brazil), with a forecast to totaling $7.9 billion.

Upside potential

Dr. Roger Knight, data manager with Infield Systems, said the upside could be even greater. "Over the period (2001-2005), a total of 153 field prospects are under consideration for development using an FPS by 48 oil and gas companies. Just five companies are operating 86 (52%) of the prospects: Petrobras with 19, BP Amoco with 18, combined Chevron Texaco with 16, TotalFinaElf with 12, Shell with 11, and ExxonMobil with 10."

Although North America has 25 floaters in prospect, all are semisubmersibles, Spars, and tension leg platforms. FPSOs have not yet been approved for use in the Gulf of Mexico.

Recent growth has been dramatic. In 1991, floaters accounted for 2% of new field developments. In 2001, it is 27%, and future prospects are even greater.

Downside potential

On small, uneconomic, and deepwater fields, the FPS makes otherwise marginal fields economic by allowing production in locations remote from pipelines.

Their advantages over fixed platforms include low decommissioning costs as the FPS can be "sailed away" at the end of the field's life and be re-used. This amortizes FPS costs over several fields, making floaters a greener option than single-use options.

In theory, over the next five years, some 55 FPSs could become available for re-use due to field depletion and these have a potential to reduce the demand from our forecast of 123 units to 68. However, this scenario is unlikely as field depletion dates could be extended due to robust oil prices and conservative initial estimates of field life. In addition, some of the earlier units may not be suitable for re-deployment.

The report was issued coincidentally with the sinking of the Roncador P-36 floater off Brazil.