Permitting, shuttle tankers and natural gas handling are secondary to having the "right" project for a floating production, storage and offloading (FPSO) vessel, but they still count.

The right project. The right time. The right return on investment. Those are the basic conditions under which an oil company would make a decision to design, fabricate and seek a permit to install an FPSO system in the deepwater US Gulf of Mexico.
FPSOs, large tanker-type vessels designed to process and stow production from deepwater subsea wells for later transport to onshore facilities by shuttle tankers, are a viable production technique and exist around the world. But they have never been used in the US Gulf. Oil companies with a growing list of deepwater and ultradeepwater discoveries there are considering FPSOs, particularly since they eliminate the need for pipelines to shore from water depths that severely tax the limits of pipeline technology.
Granted, a few more details remain to be settled should a company decide to employ an FPSO in the US Gulf. At a minimum, the company also would require:
• federal and state government permits;
• a fleet of Jones Act-compliant shuttle tankers to move the oil to coastal market points; and
• an economical way to handle natural gas co-production.
Given time, the first two are achievable, politically and operationally. Of course, the government permitting could prove dicey and time-consuming; it usually does.
But US shipyards could build the shuttle tankers - though they, too, would need time to gear up.
Handling gas is problematic, as well. In the first place, since using FPSOs with shuttle tankers steers clear of the need for conventional pipelines to move oil to shore, the same would be true for gas. And since alternatives like flaring would be wasteful, and reinjection could keep some of the gas from being recovered later, the industry probably will be compelled to use some form of floating gas transportation. Gas-to-liquids technology is one possibility, though it is a long way from practical offshore use.
But at least one other technology - ship-borne compressed gas storage - could be brought to bear relatively quickly for moving deepwater gas to shore, either directly or to an existing gas transmission hub in shallower water.
Waiting for 'Righty'
But what's really stalling the appearance of Gulf FPSOs are the above-mentioned project basics. So it's anybody's guess whether - and when - they will ever combine in the "right" way to make an FPSO happen. Meanwhile, ultradeepwater drilling is resulting in more discoveries, some of them big. But the corporate will to use an FPSO has not yet been expressed.
FPSOs are a viable way to produce oil from smaller deepwater fields whose marginal reserves narrow their economic viability. For that and other reasons, they have been brought to bear in the North Sea and in Southeast Asian waters. In most of those cases, deep water isn't even involved. It's just cheaper to lighter the oil to shore than to build new pipeline infrastructure.
Too, FPSOs are an excellent way to start early production from giant fields in deepwater areas where neither pipelines nor market infrastructures exist. They are a logical way to produce oil in deep Atlantic Ocean waters such as those off West Africa and Brazil, where several already have been installed.
But in the US Gulf, the offshore petroleum industry's birthplace - and its main research laboratory - FPSOs are still untried in an area where several other types of deepwater systems are in place and working well. But such systems now in use, like spars, tension-leg platforms (TLPs) and deep-draft caisson vessels, are limited to a water depths of about 7,500 ft (2,288 m), chiefly due the sheer weight of their subsea connections and mooring systems. However, ongoing research into lighter-weight connection materials and synthetic fiber-based mooring keeps making rapid strides in extending the water-depth capabilities of these systems.
What's more, a number of spar and TLP design modifications and hybridizations already on the planning boards would include production-handling facilities. That would allow a much simpler floating storage and offloading system to be moored alongside for shuttling the oil to shore.
In the end, these existing floating systems offer the convenience of dry wellheads, and perhaps most important of all, the industry has gained valuable field experience with them.
But there's still another thing for an oil company to consider. While the industry has spent a lot of time and resources making FPSOs a viable alternative, it is donating equal measures to developing ways to eliminate floating production systems altogether, replacing them with downhole and ocean-floor facilities. That technology, too, is moving quickly.
EIS favorable, but vague
In hopes of speeding up a decision by the US Minerals Management Service (MMS) and the US Coast Guard, among other government regulators, to declare whether FPSOs could be used in the US Gulf, the DeepStar consortium of companies several years ago urged MMS to prepare an environmental impact statement (EIS) on a generic FPSO design for the deepwater Gulf. DeepStar financed this "generic" EIS at MMS' request.
The base case evaluation was for a permanently moored, double-hulled, ship-shaped FPSO with up to 1 million bbl of oil storage capacity.
MMS published the final EIS in February, and basically, the findings were:
• site-specific impacts are basically the same as with other deepwater systems;
• most of the risk from oil spills is associated with the shuttle tankers, not the FPSOs, and the overall risk is comparable to those from other deepwater systems, including pipelines; and
• excluding FPSOs would not reduce the cumulative environmental impacts because other systems would be used in their place.
The EIS excludes certain sensitive reef and high-traffic areas, and covers only the western and central Gulf, leaving unanswered the question of whether FPSOs could be used in the eastern Gulf area, the subject of hot environmental debate.
But while the statement is generally favorable to FPSO deployment, it stresses that site-specific proposals for FPSOs would be subject to established MMS and Coast Guard review, US Environmental Protection Agency water quality permitting and any applicable review by states for coastal zone consistency. That usually takes about 2 years.
Additionally, a final record of decision from MMS on the EIS, expected to be announced around the time of the Offshore Technology Conference in Houston this past May, is still not forthcoming. It remains under review, said MMS, but industry-watchers hint that it's been delayed so the Bush administration can weave it into their new energy policy and, presumably, take the credit.
But overall, it's probably safe to say that once FPSOs are on the table for specific consideration, it would take 3 to 5 years before one could be seen at work in the US Gulf.

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