Fuel Production And Storage Vessels A Necessary Risk In Oil Production?

Around the world we have aged oil tankers being used as fuel storage vessels, fuel offloading and transfer vessels and holding vessels attached to oil platforms that are periodically off-loaded.

The vessels used are usually retired tankers that no longer transport oil at sea, primarily as they are single skinned hulls so the risk of pollution from grounding in significant or are environmentally not able to access all ports due to environmental emissions.

The focus on the use of these vessels has increased over the last few years as the world’s eyes have turned on FSO Safer currently moored off Yemen. Constructed in 1976 as an oil tanker and converted a decade later to be a floating storage facility for oil, the FSO Safer is moored about 4.8 nautical miles off the coast of Al Hodeidah Governorate. The 376-metre-long vessel contains more than one million barrels of light crude oil – four times the amount spilled by the Exxon Valdez. With no maintenance operations undertaken on the Safer since 2015 due to the conflict, its structural integrity has significantly deteriorated and the vessel is at imminent risk of spilling oil due to leakages or an explosion.

A significant spill would quickly surpass national capacity and resources to mount an effective spill response. The result would be catastrophic, devastating the Yemen coast, destroying livelihoods and forcing a closure of the ports of Al Hodeidah and As Salif - which are essential for the importation of commercial imports and life-saving humanitarian assistance. Depending on the season and prevailing wind and currents, the environmental impact would also affect Saudi Arabia, Eritrea, Djibouti and Somalia, and could disrupt vital shipping through the Bab al- Mandab Strait and the Red Sea.

In the case of FSO Safer access to the vessel is difficult. Yemen is in a state of war with Houthi rebels. Their actions possibly supported by Iran, Libya and Hezbollah, have threatened Saudi Arabia who intervened in support of the Yemen government to protect their interests. Consequently, whilst the government of Yemen is formally in control, the Houthi rebels have significant influence on how control is exercised. This has threatened the ability of the government to undertake the vital maintenance work on the FSO Safer. Consequently, she is now unmaintained and URGENT offloading is necessary to avoid a major environmental incident.

The UN, with considerable IMO support, have negotiated access to enable FSO Safer to be offloaded into another vessel. This plan has been agreed by the Yemen

Government, UN humanitarian chief Martin Griffiths told the UN Security Council about a deal to transfer the oil from the FSO Safer. Mr Griffiths gave no details of the deal but Hans Grundberg, the UN special envoy for Yemen, told reporters later that progress “as always in Yemen, needs to be solidified in order to be taken forward”.

For the sake of the environment let us all hope this initiative does achieve its goal and eliminates the risk FSO Safer currently presents.

In August 2019, Japanese offshore platform operator MODEC reported cracks in the hull of the FPSO Cidade do Rio de Janeiro causing a small oil leak. The FPSO was one of the many offshore production facilities that Petrobras reported it would be decommissioning at maturing oil fields, but others remain in service around the globe.

Off the Nigerian coast on 3 February an explosion occurred on board FPSO Trinity Spirit, a floating production, storage and offloading (FPSO) vessel built in 1976, she measured 1,105ft and had a capacity of 274,774dwt.

Following the explosion, a fire engulfed the vessel. Whilst it was not clear of the amount of oil on board the fire is thought to have consumed whatever it was carrying which are thought to be residues. The oil field that it served had not been is use for 2 years.

On board were a crew of 10 and it is thought that some survived. FPSO Trinity Spirit was converted into an FPSO vessel almost 50 years ago and its equipment was a contributory factor, along with the Nigerian oilfield operator going into receivership and, perhaps, regulatory and enforcement issues.

FSO Trinity Spirit ablaze Feb 22

As more oil companies look to develop fields using redeployed FPSOs, the FPSO Trinity Spirit explosion should serve as a cautionary tale as to what may happen if asset integrity and safety issues on these ageing vessels is not prioritised.

In UK waters, BP has operated the FPSO Foinhaven 118 miles West of Shetland. This FPSO has been working in this field since 1997 and has been plagued by a plethora of health and safety issues. Fortunately, regulatory pressure and BP have agreed to its decommissioning which will lead to different arrangements for this oil field or its decommissioning.

Around the world some over 200 vessels are deployed worldwide as FPSOs. Floating production, storage and offloading vessels are particularly effective in remote or deep water locations, where seabed pipelines are not cost effective. FPSOs eliminate the need to lay expensive long-distance pipelines from the processing facility to an onshore terminal. This can provide an economically attractive solution for smaller oil fields, which can be exhausted in a few years and do not justify the expense of installing a pipeline. Once the field is depleted, the FPSO can be moved to a new location.

New build FPSOs have a high initial cost (up to USD1 billion) but require limited maintenance. In addition, the ability to reposition/repurpose them means they can outlast the life of the production facility by decades. A cheaper alternative for smaller platforms is to convert an oil tanker or similar vessel at a cost below USD100 million.

With capital investment in oil and gas facilities likely to be less, rather than more, likely as we move to net zero there is a risk in each one that is deployed. Whilst most operators take the risk of them seriously some do not as in Trinity Spirit and are political pawns as in FPSO Safer.

Technology is helping owners to manage the risk they present. Innovative technologies, coupled with developments of existing ones, have played a big part in maintaining the generally positive record for so long – not least by enabling new possibilities for future projects to be considered.

Part of the reason for the enduring hold of the FPSO approach on the market’s leading edge lies in its simplicity. An offshore production facility capable of accumulating and storing oil before periodically offloading it to tankers for transport to the mainland has obvious logistic and economic appeal.

Not only does this directly permit the rationalisation of shuttle tanker movements but, more fundamentally, it can also allow marginal oil fields, or those in deepwater areas at some physical distance from existing pipelines, to be developed. For the former, their ease of redeployment once economic viability is exhausted is the key, while for the latter, the cost of submerged pipelines is obviated.

However, much of the secret of FPSO future success lies in technological innovation. The era of floating production began in 1975, when a converted semi-submersible drilling rig – Transworld 58 – was deployed as the world’s first FPS on the Argyll field in the North Sea, offshore UK.

Two years later, the first oil FPSO appeared on the Shell Castellon field, operating in 117m of water in the Spanish Mediterranean. Since then, the concept of floating production has blossomed, with the arrival of tension leg platforms (TLPs) and spars to add to the original floating production semi-submersible (FPSS) and FPSO fore-runners.

Nevertheless, FPSOs have made the greatest inroads and, accounting for 63% of all FPS installations, they remain the dominant force in the global floating production landscape.

There is likely to be an increase in FPSOs over the next decade or so:

“More than $40 billion is expected to be spent on 123 floating production systems.”

According to a recent report by industry analyst Douglas-Westwood, in the period leading to 2012, more than $40 billion is expected to be spent on 123 floating production systems (FPS), with about 95 FPSOs – accounting for 80% of this capital expenditure (capex) – to be installed around the globe. This represents significantly greater prospects for the sector than the preceding equivalent period, which saw a total of 85 FPS units installed, and is anticipated to see particular growth in floating installations in Asia, Australasia, South America and Western Europe.

Global FPSO expenditure is largely predicated on whether fields are to be developed by redeploying or rehabilitating existing units, converting additional tankers or commissioning new-builds. Within the 2008-2012 window of the Douglas-Westwood “World Floating Production Report”, from a market value perspective, the forecast is that Africa, Asia and South America will make up about 66% of the anticipated global FPS expenditure.

To address these challenges, ABS has brought together leading companies in the sector forming a new working group that will review the current issues and produce outcomes that assist with the evaluation and potential acceptance of life extension. The working group consists of Chevron, Shell Trading Company, Petrobras, MODEC, and SBM, as well as The Bahamas Maritime Authority, the Republic of the Marshall Islands Registry, and the U.S Coast Guard 8th District.

“Structural Integrity is one of our main Process Safety Barriers and we all face the same challenges on aging units,” said Ivar Houthuysen, SBM Assets Integrity Director. “It is of utmost importance and in everybody’s interest to share experience, knowledge, ideas and that we agree on a best way forward to maintain structural integrity in a safe and efficient manner.”

The group will undertake five projects aimed at using technology to tackle a range of FPSO safety issues. The issues to be reviewed include composite materials repairs for offshore structures, life extension of wire ropes, gauging management software, applications of photogrammetry and 3D Lidar Laser Scanning, and the role of artificial intelligence in corrosion analysis.