Addressing delegates at the Floating Production and Storage Systems Conference in London today, John Westwood, Managing Director of industry analysts Douglas-Westwood stated that their data shows "a total of 26 FPSO redeployments on screen for the 2004-2008 period – 28% of the 92 FPSO prospects for the period.
"FPSOs are the world's most popular floating production system. As of year-end 2003, there had been 136 FPSO deployments worldwide – more than all the other floating production systems (FPSSs, TLPs, and spars) put together. There are currently 89 FPSOs in operation and as the fields they are working on are depleted the vessels become available for redeployment.
"Unlike the fixed platform, the ability to redeploy an FPSO means that its capital cost can be amortized over the life of several small fields, transforming the field economics and in many instances making FPSOs the production system of choice.
"However, it is rare for all projects to go ahead and project start-up is often delayed. Also in a period of very high oil prices it is more likely for existing contracts to be extended as oil companies retain FPSOs on depleting fields to 'scrape the barrel'.
"How many of the 26 prospects will go ahead? Our forecasts in the latest edition ofThe World Floating Production Report show that 21 of these redeployments are expected to be completed over the period, at a cost of $830 million."
Douglas-Westwood FPSO data analyst Georgie MacFarlan stated, "The Asia region is expected to see the highest number of redeployments, with eight units forecast for the period to 2008, compared to just one redeployed unit in the previous five-year period.The World Floating Production Report identifies marginal field developments as one of four key drivers for the floating production system market and it is this type of development that is expected to underlie much of the demand for redeployments.
"We are now seeing companies emerging with the sole aim of targeting this small fields market, such as the Aberdeen-based Vienco, and this is expected to provide significant upside potential to our forecasts, particularly in the North Sea area."
Lead author of the report Steve Robertson added, "The lower capex and shorter delivery times that redeployments offer make this an increasingly attractive field development solution. The strong levels of activity forecast for the coming five years should provide a good variety of opportunities for FPSO leasing contractors.
"The other main characteristic of the future market will be the continuing shift to deepwater. We forecast that over the next five years 70% of the global spend will be on floaters moored in water depths of 500 m or greater. This is the other extreme of the market where fields tend to be much larger, oil production much greater, and consequently redeployment candidates are fewer."