Floating production expenditures set to double

Energy business advisors Douglas-Westwood forecasts that between 2013 and 2017 $91billion will be spent on floating production systems (FPS) – an increase of 100% over the preceding five-year period. In Douglas-Westwood’s new World Floating Production Market Forecast 2013-2017, a total of 121 floating production units are forecast – a 37% increase.

This growth is driven by multiple factors, such as a larger proportion of newbuilds and conversions compared to redeployments, a greater degree of local content resulting in increased costs and general offshore industry cost inflation.

Report author, Hannah Lewendon, commented, “Floating production is firmly established as a cost-effective method of developing oil and gas fields around the world. In water depths beyond 500m floating production systems becomes one of the few options open to operators, an increasingly important factor as production moves into these areas. DW forecast that 63% of global FPS market spend will be in deep waters.

“Latin America accounts for 29% of the 121 installations forecast and 37% of the projected capex. Most installations to date have been in Petrobras-operated fields off Brazil and this trend is likely to continue, although substantial delays are expected for Petrobras’ offshore E&P investment. Asia, then Africa and Western Europe make up much of the remaining forecast capex.

“FPSOs represent by far the largest segment of the market both in numbers (94 installations) and forecast capex (80%) over the 2013-2017 period. FPSSs account for the second-largest segment of capex, followed by TLPs, then spars.

Steve Robertson, Douglas-Westwood director, concluded, “Overall, the outlook is considered positive and the value of annual installations is projected to grow from $10.2 billion in 2013 to $26.2 billion in 2017. Three main factors will affect the supply of units in the FPS sector; financing, local content and leasing. The FPSO leasing sector remains weak with 85% utilization at present compared to 89% at the time of the 2011 edition of the report. Contractors are reporting poor returns on existing projects and write-downs on new projects due to cost over-runs. Financing remains a challenge for leasing contractors and smaller E&P companies as a result of the debt crisis in Europe. At the same time local content requirements are pushing up prices and extending lead times, particularly in Brazil.” 

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Leveraging the Power of Information in the Energy Industry

Information Governance is about more than compliance. It’s about using your information to drive ...

Reduce Engineering Project Complexity

Engineering document management presents unique and complex challenges. A solution based in Enter...

Revolutionizing Asset Management in the Electric Power Industry

With the arrival of the Industrial Internet of Things, data is growing and becoming more accessib...