FPSO: Mobile Units For Deep Water Profits

More than half of the oil and gas discoveries in the decade from 2000-2010 were made offshore, and with most oil and gas companies now exploring deepwater and ultra-deepwater frontiers for new prospects, exploiting these reserves will require the deployment of floating production, storage and offloading (FPSO) vessels.

Projections show that deep water production is set to double by 2015, and capital expenditure on deep water developments is expected to increase by as much as 179% to $205 billion.

As the deep water revolution rolls on, more and more traditional service companies are making sure that they don't miss the boat by expanding their businesses into the FPSO arena.

Although the FPSO business is dominated by three main players that account for more than 40 per cent of the market - SBM Offshore, BW Offshore and Modec - companies that have often worked with E&P entities in a contractor nature have now taken the plunge into the FPSO pool.

An example of this is UK services company Petrofac, that recently paid $70 million for two floating production, storage and offloading vessels in Asia-Pacific waters that it will offer as a fast-track development solution for the owners of deep water oil and gas field prospects.

Petrofac's purchase of the Jasmine Venture and Cossack Pioneer, follows the recently acquired East Fortune FPSO unit, which is currently engaged in exploiting Malaysia's Berantai fieldfor Petronas.

Towards full-spectrum oilfield services

This is part of the company's recently-launched "Integrated Energy Services" Initiative, which will see Petrofac roll out a full-spectrum approach to oilfield services.

A Petrofac spokesperson said of the organisation's new strategy: " Pre-investing in field infrastructure in readiness for future developments is part of our strategy to deliver fast-track development solutions for resource holders."

Petrofac is not the only oil and gas services company to be investing in the burgeoning FPSO market.

The Maersk Group has also branched out into the field, supplying "total solutions for offshore oil and gas field developments" with a fleet of five mobile production vessels, including FPSO, FGSO (Floating Gas, Storage and Offloading) and jack-up production units.

Speaking on the company's investments, Stig Hoffmeyer, chief executive of Maersk FPSO said: "I am confident that the industry will grow significantly in the coming 10, 20 and 30 years. I have never been in an industry before where the future outlook is so bright."

With their operability and mobility, FPSOs are fast becoming the weapon of choice for offshore oil and gas production worldwide. In a climate of oil price volatility, depleting easy-to-exploit reserves and increased deep frontier exploration, it is hard to see this progress abating.