Page 26: of Marine Technology Magazine (April 2016)

Offshore Market: Floating Production Systems

Floating

Production Systems

Which Way is Up? The Six Things You need to Know NowWhich Way is Up? The Six Things You need to Know Now

Jim McCaul – IMA/World Energy Reports o question that the market for new ? oating pro- half of these production units are likely to be scrapped due to duction systems has taken a battering. The past age and/or market conditions.

12 to 18 months have been a dif? cult period for The growth in the number of production ? oaters in service everyone in the business sector. Absence of new or available is shown in the accompanying chart.

Ncontracts has forced fabricators and equipment An additional 55 production ? oaters and 7 storage/of? oad- suppliers to make huge cutbacks in personnel and spending. ing units are currently on order. Of these, 53% are FPSOs,

But deepwater production will rebound – oil demand keeps 13% are another type of oil/gas production unit and 35% are growing -- and though the signs are mixed we see indications LNG liquefaction or regasi? cation units. of the rebound starting. 2. Oil Prices Hit Bottom in January and Appear to be 1. Production Floater Inventory and Current Orders Recovering

First some numbers about the state of the business. 261 oil/ The continuing imbalance of oil demand and supply has gas ? oating production units are currently installed on off- weighed on oil pricing and has caused many oil companies shore ? elds. FPSOs represent 64% of the installations, pro- to cut back on capital spending plans. Brent crude in March duction semis 15%, tension leg platforms 10%, production 2014 was trading around $105 per barrel. By March 2015 the spars 8% and production barges 2%. 19 LNG regasi? cation price had fallen to around $55 per barrel – and in late March units and 92 FSOs are also in service. No FLNGs are yet in 2016 Brent was trading around $40 per barrel. The nadir was operation - but this is about to change when PFLNG Satu is on 20 January 2016 when spot Brent closed at $26 – a level far delivered in April. below the breakeven on many oil ? elds.

Another 25 oil/gas production units are off ? eld and avail- As a result of the oil price collapse, daily announcements of able for redeployment, FPSOs account for 76% of the avail- lower capital spending have been common over the past six able units, production semis the remaining 24%. More than to 12 months – from majors like ExxonMobil to smaller up-

April 2016

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