The floating production sector is in the midst of a market surge that has seen more than US $11 billion in new orders for large and more complex FPSOs in the last four months.

According to analyst International Maritime Associates (IMA), the sector has been especially active over the past few months, with 10 production floaters ordered since March. This includes a $3 billion FPSO for Nigeria (the most expensive FPSO ordered), two $1.8 billion FPSOs for Brazil, a $1.8 billion FPSO for the UK, a $1.3 billion production barge for the Congo, and a $1 billion FPSO for the Gulf of Mexico. This continues the trend of increasingly higher prices, with the cost of a production floater now averaging close to $1 billion.

In its latest market figures, the analyst said a total of 241 new floater projects are in the bidding or planning stage, and the future project pipeline keeps growing. A year ago 233 projects were in the planning or bidding stage. Five years ago, the figure was 141 projects. Ten years back, 94 projects.

“Potential deepwater projects should grow significantly over the rest of the decade,” said Jim McCaul, head of IMA. “Oil demand keeps growing, the futures market points to $90+ per barrel oil through the decade, deepwater drill contractors are running at full load, and 90+ additional drillships/semisubs are scheduled for delivery over next few years. These new drill units will increase deepwater drill capability by 30% and remove a bottleneck that has constrained exploration and development in deepwater.”

The order backlog is also at an all-time high. The current backlog consists of 72 production floaters – 40 FPSOs, six production semisubs, five tension-leg platforms, four spars, one production barge, four FLNGs, and 12 FSRUs. Almost half of the floater fabrication work is taking place in Asia, principally conversion work in Singapore and China, with newbuilding work principally in Korea, IMA added.

Delivery of the equipment will grow the production floater inventory by 27%. In the backlog are 46 units utilizing purpose-built hulls, 26 units based on converted tanker hulls, and one unit being modified from an existing production semisub. Of the production floaters being built, 41 are owned by field operators and 31 are being supplied by leasing contractors.

Brazil continues to dominate orders for production floaters – 23 units are being built for use offshore Brazil, 32% of the order backlog.

In terms of the current fleet, there are 269 floating production units now in service or available, a figure 22% higher than five years ago, and almost 80% higher than 10 years back. FPSOs account for 61% of the existing systems. The balance is comprised of production semis, TLPs, production spars, production barges, and floating regasification/storage units. A total of 13 units (12 FPSOs, 1 semi) are off field and available for reuse – resulting in an overall utilization rate of 95.2%. Another 93 floating storage/offloading units (without production capability) are in service.

There also has been a steady upwards trend in terms of the processing capacities for FPSOs, as well as the sheer number of units. In mid-2003 there were 83 FPSOs in operation, whereas today there are 153 units, excluding available FPSOs and a few small units used for well testing.

In the past 10 years, oil processing capacity on these FPSOs has grown from 6.1 MMb/d to more than 13.7 MMb/d. Not only are there more FPSOs installed, but their oil processing capacity has increased – from an average of 74,000 b/d to 90,000 b/d during the past decade.

IMA did go on to flag up a potential spanner in the works, however. “Deepwater projects compete for a place in capital expenditure plans – and investment opportunities in tight oil and shale gas could cause some deepwater projects to slip from oil company capex budgets.

“This could be occurring now. Maybe it is more than a coincidence that five major deepwater projects have been deferred over the past several months. Each project had its own reason for deferral. But five in such a short period sends warning signals to everyone in this sector,” McCaul said.