Strong outlook for FPSOs

Rystad Energy forecast

In meeting global demand for oil in the upcoming years, ofshore will play an increasingly important role. This will result in a strong demand for FPSOs.

ALL IMAGES COURTESY OF RYSTAD ENERGY, UNLESS STATED OTHERWISE.

Rystad Energy forecasts in its FPSO Outlook (March 2023) that ofshore projects sanctioned in 2023 and 2024 will amount to 68%, or 24 billion barrels, of committed conventional resources, up from just 40% for projects sanctioned between 2015 and 2018.

In investment terms, ofshore felds sanctioned this year and next represent total greenfeld capex of USD214 billion, the frst back-to-back years in which over USD100 billion in ofshore capex will be sanctioned since 2012-2013. This will provide a solid springboard for ofshore activity and supplier opportunities.

Flurry of activity

Increased ofshore sanctioning will boost drilling activity, with ofshore rig demand for foaters rising 10% and jackup demand 9% in 2023, summing to 488 rig years. Subsea infrastructure is also on the rise, with subsea tree awards set to more than double this year after bottoming out between 2020 and end2022, with a modest wave of subsea projects to maintain solid annual demand of 270 subsea trees over the next fve years. This year, installations of subsea umbilicals, risers and fowlines (SURF) are expected to span 4,606km. Together, this furry of activity will drive up ofshore vessel demand. Eight FPSOs were awarded in 2022 with another twelve awards expected this year, as FPSOs lead the charge in deepwater developments. Looking at the upcoming years, Rystad Energy anticipates that the ofshore investments cycle will last for several years as oil demand grows until the end of this decade. This means that foating production will remain competitive. From 2023 to 2030, Rystad Energy forecasts 48 FPSOs will be awarded for new greenfeld developments. The majority of these, nineteen units, will be destined for Brazil and Guyana with twelve and six units respectively. Europe will also see large number of units, nine in total, with new countries added to the list such as Cyprus and Ireland. Africa, Angola, and Nigeria will see three and two units respectively. In Namibia, recent exploration success will lead to two new FPSOs in this emerging basin. In addition to greenfeld awards, Rystad expects dozens of life-time extension projects and re-deployments to materialise in the brownfeld market as energy prices stay high and alternative use of foating infrastructure for low carbonindustries emerges.

Curb emissions

The FPSO sector will be responsible for 38t millions of CO2 emissions in 2023. Rising demand for FPSO units means emissions from this sector will increase to almost 50t million of CO2 by 2030 unless steps are taken to curb emissions. Like other ofshore service providers, some FPSO companies are already working to decarbonise their operations, ofering a range of solutions in line with Scope 1, 2 and 3 targets. However, with the imperative to limit global warming becoming increasingly urgent, greater collective eforts must be made to tackle the FPSO sector’s emissions profle. A look at current environmental, social and corporate governance (ESG) reporting reveals that most major FPSO leasers intend to implement emissionreduction strategies. When it comes to environmental disclosures, all major FPSO leasers disclose emissions data, with most reporting extensively on Scope 1, 2, and 3 emissions.

Electrifcation

When it comes to reducing carbon emissions, FPSO providers are presently innovating to develop bespoke solutions or adopting advanced technologies, such as electrifcation. Most greenhouse gas (GHG) emissions from conventional FPSOs are generated by gas turbines used to produce electricity on a facility. To reduce these, electrifcation from shore is an option in case ofshore platforms lie closer to shore. Operated by Vår Energi since 2016, the cylindricalshaped and permanently moored Goliat FPSO in Norway is electrifed from shore via a 105km-long, high-voltage alternating current (HVAC) cable providing up to 75MW of power. Shipshaped FPSOs would require electrical connectors to swivel to allow for weathervane movements and for rapid connection and disconnection. At present, there are no subsea HVDC connectors qualifed for these applications.

Other operators are looking to reduce emissions by powering FPSOs using renewable energy generated at the feld itself. For instance, the Excalibur FPSO to be deployed by Ping Petroleum at the Avalon feld in the UK North Sea will be electrifed using a dedicated foating ofshore wind turbine.

Carbon capture and storage

Another alternative for reducing emissions is to deploy carbon capture and storage (CCS). In an FPSO, carbon emissions are concentrated in specifc locations, near power generators or gas processing equipment, making them easier to capture with FPSO modules/ systems. Both Singaporean yards Keppel and Sembcorp Marine are building ‘next generation FPSOs’ for Petrobras. The P-80 and P-82 units for the Buzios feld in Brazil’s Santos Basin for example will be ftted with carbon capture, utilisation and storage (CCUS) facilities, amongst other emission-reduction technologies. It is likely that these carbon capture technologies for FPSOs will become more commonplace in the future, especially since Petrobras has a keen interest in this sector and is driving demand. In terms of advancing decarbonisation technologies, SBM Ofshore has introduced the standardised hull Fast4Ward and the company is now looking to develop a zero-emission FPSO concept as well as promoting its new foating wind solution Float4Wind.