FUTURE FPSO PROJECTS IN THE
DECISION-MAKING PROCESS
Presentation by Jim McCaul at the
Emerging FPSO Forum 25 September 2013
OUTLINE OF PRESENTATION
 The Pros and Cons of FPSOs
 Profile of FPSO use worldwide
 FPSO Projects in the Planning Stage
 Our Forecast of FPSO Orders
 Issues Impacting Outlook
FPSO PROS AND CONS
PRO
CON
•
Has field storage and can be used in remote
locations – self contained
•
Subsea tiebacks create higher well
maintenance costs
•
Can operate on shallow or ultra-deepwater
fields
•
Turret/swivel machinery complex and failure a
major problem
•
Less weight sensitive than other types of FPSs
•
•
Leasing transfers some risk from field operator
to contractor
Cost and delay surprises when converting
tankers to FPSOs
•
Redeploying an FPSO not as easy as it may
appear
•
Assumed residual value used as a competitive
tool in leasing bids
•
Deck area allows flexibility in process plant
layout
•
Surplus/aging tankers can be used for
conversion
•
Can be modified/redeployed following field
depletion
•
Quick disconnect turrets enable emergency
relocation
Source: BWO
204 FPSOs ARE IN SERVICE,
AVAILABLE OR ON ORDER
(number of units as of September 2013)
56

42
28
OnOrder
Order
On
Existing
Available
25
14 14
14
3
3
3


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
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a
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az fric rop Asi a/N hin ndi nea exic nad Fiel
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
27% of FPSOs are offshore
Brazil
21% are located offshore Africa
14% are off Northern Europe
12% are in Southeast Asia
7% are off China
7% are off Australia/NZ
5% are in other locations
7% are without field assignment
* * * *
13 FPSOs are currently off field
and looking for work
1 FPSO being built has no field
assignment
Note: Data exclude 4 small FPSOs used for well test in the GOM and
2 FPSOs built for emergency spill recovery
84% MORE FPSOs IN SERVICE THAN 10 YEARS AGO –
WITH 123% MORE OIL PROCESSING CAPACITY
Number of FPSOs
in Service
Total Oil Processing
Capacity on FPSOs
Avg. FPSO Oil
Processing Capacity
(000s b/d)
(000s b/d)
Avg. Water Depth of
FPSO Installations
(meters)
2003
2013
% Chg.
2003
2013
% Chg.
2003
2013
% Chg.
2003
2013
% Chg.
Africa
18
38
111%
1396
4390
214%
78
116
49%
208
678
226%
Australia/NZ
9
12
33%
657
979
49%
73
82
12%
152
290
91%
Brazil
9
37
311%
845
3937
366%
94
106
13%
826
1075
30%
Canada
1
2
100%
150
250
67%
150
125
-17%
90
105
17%
China
11
13
18%
734
902
23%
67
69
4%
105
77
-27%
Gulf of Mexico
India
0
2
n.a.
280
n.a.
140
n.a.
1339
n.a.
0
2
n.a.
120
n.a.
60
n.a.
643
n.a.
Mediterranean
5
3
-40%
174
77
-56%
35
26
-26%
228
321
41%
N. Europe
19
22
16%
1783
1884
6%
94
86
-9%
167
159
-5%
SE Asia
11
22
100%
401
877
119%
36
40
9%
67
137
104%
Global Total
83
153
84%
6140
13696
123%
74
90
21%
227
534
135%
Note: Data exclude 13 FPSOs currently without field contract, a spill recovery FPSO and 4 small FPSOs used for well test on the Mexico side of GOM.
44% OF FPSOs IN SERVICE OR
ON ORDER ARE LEASED
Total
FPSOs
Owned
Units
Leased
Units
% Leased
Africa
42
23
19
45%
Australia/NZ
14
9
5
36%
Brazil
56
31
25
45%
Canada
2
2
0
0%
China
14
14
0
0%
Gulf of Mexico
3
0
3
100%
India
3
0
3
100%
Mediterranean
3
2
1
33%
N. Europe
28
16
12
43%
SE Asia
25
10
15
60%
Global Total
190
107
83
44%
Note: Data exclude 14 existing and on order FPSOs without field contract, 2 spill recovery FPSOs and 4 small FPSOs used
for well test on the Mexico side of GOM.
MORE THAN 120 FPSO PROJECTS ARE IN
THE VISIBLE PLANNING STAGE
• These are announced discoveries where an FPSO is either
planned or logical production solution given the location
and field characteristics
~25% are in the bidding or final design stage
~75% are in the planning and study phase
• Taking into account projects requiring multiple production
units, development of the discoveries could require 135 to
140 FPSOs
• Another 20+ discoveries could require an FPSO, BARGE,
MOPU/FSO, SUBSEA or other system
WHERE FPSO PROJECTS
ARE BEING PLANNED
•
Brazil is clearly the major location
for future FPSO projects – 51
projects in planning stage
•
Africa is next in line – with 13
projects in Angola, 11 Nigeria and 9
elsewhere
•
SE Asia is in 3rd place with 11
projects
•
No. Europe is in 4th place with 8
projects
•
In 5th place is the GOM – 6 projects,
all on the Mexican side
Brazil
41%
51
33
Africa
27%
14
6
GOM
5%
8
11
Other
11%
SE Asia
N. Europe 9%
7%
Discovery
Country
Field Operator
EXAMPLES OF FPSO
PROJECTS IN THE
PLANNING STAGE
Estimated
Production Start
(meters)
Africa
Blk 32 -- Kaombo GG
Bonga Southwest
Nsiko
Elephant
Bobo
Water
Depth
Angola
Nigeria
Nigeria
Congo
Nigeria
Total
Shell
Chevron
CNOOC
Shell
1600
1200
1768
550
2480
2016/17
2017/19
2018/20
2020/25
2020/25
Brazil
Oliva/Atlanta BS-4
Carioca BM-S-9
Carcara BM-S-8
Espadarte Module III
Libra Complex
Franco Leste
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Queiroz Galvao
Petrobras
Petrobras
Petrobras
Petrobras/ANP
Petrobras
1560
2150
2027
750
2200
1800
2017/19
2016
2018
2020
2020/25
2019
Other Regions
Ayatsil/Tekel
El Perdido
Kraken 9/2b
Gohta
Sea Lion
Belud
Bunga Dahlia/Teratai
Ubah
D-56
Mexico
Mexico
UK
Norway
Falklands
Malaysia
Malaysia
Malaysia
India
Pemex
Pemex
EnQuest
Lundin
Premier
Hess
Petronas
Shell
BP/Reliance
115
2500-3000
100
342
450
155
65-70
1430
1743
2016/18
2018/22
2016/17
2020/25
2018/20
2015/16
2016/18
2018/20
2019-22
LOCATION AND TIMING OF
VISIBLE FPSO PROJECTS
Likely Production
Start
Number FPSOs
Required
Visible
Projects
2014/20
2020+
2014/20
2020+
Africa
33
17
16
17
16
Australia/NZ
1
1
0
1
0
Brazil
51
29
22
29
36
Canada
2
0
2
0
2
China
1
1
0
1
0
Gulf of Mexico
6
4
2
4
2
Mediterranean
3
3
0
3
0
N. Europe
Other So. Amer
8
3
7
3
1
0
7
3
1
0
SE Asia
11
11
0
11
0
SW Asia
4
3
1
3
1
123
79
44
79
58
Global Total
PROCESSING PLANT CAPACITY IN
VISIBLE FUTURE FPSO PROJECTS
(b/d in 000’s)
<50 b/d
50-100 b/d
29
14
Gas
10
4
44
100-150 b/d
• 58% require topside plants with
100,000 to 200,000 b/d oil
processing capability
200+ b/d
• 21% require topside plants with
50,000 to 100,000 b/d capacity
• 10% involve small FPSOs with
less than 50,000 b/d plants
36
150-200 b/d
• 3% are mega- FPSOs with more
than 200,000 b/d processing
capacity
• 7% are primarily gas FPSOs
BREAKDOWN OF PROCESSING CAPACITY REQUIRED FOR
VISIBLE FUTURE FPSO PROJECTS
(b/d in 000’s)
FPSOs Required Between 2014-2020
50 to 100 to 150 to
<50 b/d 100 b/d 150 b/d 200 b/d 200+ b/d
Africa
5
Australia/NZ
1
Brazil
2
7
2
15
9
2
FPSOs Required 2020+
Gas
50 to
100 to
150 to
<50 b/d 100 b/d 150 b/d 200 b/d 200+ b/d Gas
1
5
5
4
3
3
12
21
Canada
1
1
2
China
1
Gulf of Mexico
2
Mediterranean
2
N. Europe
2
Other So. Amer
1
1
1
1
1
5
1
3
SE Asia
6
SW Asia
2
Global Total
14
2
1
2
1
19
24
11
3
8
1
0
10
20
25
1
2
WHAT WILL DRIVE THE PACE OF FUTURE
FPSO ORDERS?
 Underlying market conditions
 Smaller FPSOs for marginal fields are influenced by near term oil price
expectations and availability of financing
 Large FPSOs intended for major developments tend to be less sensitive
to oil price and financing
 Passing the FID hurdle
 But even the biggest oil company has to make choices -- there are
budget constraints and limits on available personnel to manage project
implementation
 Whether an FPSO project gets into the CAPEX plan depends on its
ranking in terms of expected return on investment
 This will be determined by the project economics – and the economics
of other investment possibilities
MARCH 2013 FORECAST OF FPSO ORDERS
OVER THE NEXT 5 YEARS
Most Likely Forecast Assumptions
Forecast
next 5 years
130
Actual
110
past 5 years
76
90
 Global economic growth averages 3
to 4 percent annually over next few
years
 Oil demand growth remains around 1
percent per year
 Mideast tensions continue, but no
major oil supply interruption
 Oil price expectations hover in $90 to
$110 range
 Some cost growth and delivery
bottlenecks in the FPSO supply base,
but not enough to slow major project
starts or erode contractor profits
No. Orders
2008/12
Low
Forecast
Most
Likely
High
Forecast
No. Orders 2013/17
 No major environmental incident
involving an FPSO
 No major impact from shale oil on
deepwater investment
ASSUMPTIONS UNDERLYING THE
HIGH AND LOW FORECASTS
Low Forecast Assumptions

China and/or India economies falter,
Europe/U.S. economies continue to stagnate
over next few years
High Forecast Assumptions

Global economic rebound accelerates quickly
from 2013 onward, rises to 4 %+ per year

Oil demand growth tracks upward with
economic growth

Mideast tensions grow, oil supply interrupted

World GDP growth turns downward

Global oil demand growth falls as economic
activity and world output slows

Shale oil and/or tight oil projects meet
worldwide opposition, delaying project starts

Tight oil, shale oil finds grow internationally,
technology advances lower cost

Many unconventional onshore fuel projects
encounter continuing logistics constraints

Oil price expectations fall to $70 to $90
range, negating commercial viability of many
visible marginal floating production projects

Oil prices spike to $150+ and expectations
remain above $120, making most visible
marginal floating production projects
commercially viable

Contractors experience supply constraints,
raising costs, creating delivery delays

Little cost growth, few delivery constraints in
the floater supply chain
THE LOW END OF THE MARCH FORECAST IS
NOW LOOKING MORE LIKELY
• Portfolio of potential FPSO projects has been
growing
• But new project starts have slowed – 9 FPSOs have
been ordered thus far in 2013, an average of 1
order/month
• Cost growth, access to financing, market barriers,
other issues seem to be creating barriers
• We now see the low end of the forecast range – i.e.,
~90 FPSOs – as the most likely forecast of FPSO
orders
ISSUES
 Local content requirements are
 Creating market entry barriers and limiting
competition
 Raising costs – e.g., Egina FPSO $3.1 billion!
 Clogging the supply chain
 Shale oil/tight oil growth is a threat to deepwater
 Added supply could result in lower oil prices
 Shale oil projects could draw investment resources
from deepwater
 Deepwater costs are increasing – shale oil/tight oil
cost are falling
Thank You
If you would like to discuss any aspect of
this presentation or get further details on
the FPSO market, please contact
Jim McCaul
imaassoc@msn.com or
1 202 333 8501
Our website has further information that
you may find useful. Please give us a visit.
www.imastudies.com