Rising oil prices are boosting hopes that more FPSO units will join the workforce following years of lackluster activity caused mostly by spending cutbacks driven by the downturn.

But a quick turnaround is not expected, considering the long lead time needed for offshore infrastructure.

A report released Jan. 9 by Stratas Advisors forecast that additions of new, operative FPSOs will wane, with six vessels added in 2018 and only four in 2019. However, more FPSO vessels will go to work between the years 2020 and 2023, with each year seeing about 10 more FPSOs put to sea.

“Geographically, Latin America is booming in terms of FPSO usage in the next 10 years, driven by the ongoing investment in Brazil presalt developments,” Stratas said. “The region is expected to more than double its FPSO vessel count by 2025 from the current 42 to 88. Most of the new additions (40 of 46) are designated to Brazil.”

In December, the FPSO Cidade de Caraguatatuba became the latest Petrobras vessel to commence operations. The vessel, which is capable of processing 100,000 barrels of oil and compressing 5 million cubic meters of gas daily, began producing oil from the Lapa Field in the Santos Basin on Dec. 19.

The FPSO vessel, which is connected to the field via production well 7-LPA-1D, marked the third major Petrobras production system to start operating in 2016. The other two were FPSOs, Cidade de Saquarema, which is connected to the 8-LL-81D-RJS production well in the Santos Basin’s Lula Field, and Cidade de Maricá in the Lula Alta area of the Lula Field. Both vessels are owned by the consortium of SBM Offshore, Mitsubishi Corp., Nippon Yusen Kabushiki Kaisha and Queiroz Galvão Óleo e Gás.

Petrobras has said the Libra Consortium—which includes Petrobras, Royal Dutch Shell Plc (NYSE: RDS.A), Total, CNPC and CNOOC— expects to hire an FPSO for the Libra Pilot project during 2017 with startup scheduled for second-half 2020. In October 2016, the consortium started a new bid process for the FPSO after prices came in “abnormally” higher than expected given market conditions.

Stratas expects the Latin American region to surpass the Asia-Pacific region's number of operating FPSOs. With 48 FPSO units deployed, Asia-Pacific currently outnumbers any other region, the consulting firm said.

MODEC, a Houston-based builder of FPSOs, installed or operates about seven units in southeast Asia and another three in the Oceania region, its website says — nearly as many as Stratas predicts to join the global fleet in 2018.

Growth is also expected offshore West Africa, a region where 37 FPSOs are currently operating, Stratas said. The FPSO Prof. John Evans Atta Mills is among the most recent vessels to start production, flowing oil from the Tullow Oil-operated Tweneboa, Enyenra and Ntomme fields offshore Ghana. Another 12 FPSOs are in the conceptual planning stage and five more are currently being built offshore West Africa.

Another region likely to see more FPSOs: offshore Europe. Stratas’ forecast indicates seven more units are in store for northwest Europe, where 23 are now operating.

“The industry had about 140 FPSOs actively employed globally in 2015. Operators added seven FPSOs to the global fleet in 2016. In 2017, 13 FPSOs are looking to start first production,” Stratas said in its report. “Because of the long investment cycle on offshore developments, the long time lag has created a seeming prosperity of the FPSO market.”

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Velda Addison can be reached at vaddison@hartenergy.com.

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