The floating production system (FPS) sector is forecast “to boom over the next five years” with spending on facilities in shallow water, deepwater, and ultra-deepwater plays all set to rise, according to a new report.

FPS capex is expected to rise 18% CAGR (compound annual growth rate) between 2013 and 2017, compared with 10% in the previous five-year period, said Infield Systems’ Floating Production Market Systems Report to 2017.

The number of installations in 2017 is forecast to be 95% higher than in 2008, added the report, highlighting the growth rate the FPS sector is expected to follow.

“This growth in both capex and number of installations is largely driven by the increase in the number of developments to monetize gas in remote locations, as well as the increasing focus on optimizing production from ultra-deepwater developments,” Infield said.

Three Regions Dominate

Africa, Latin America, and Australasia are expected to account for the most significant levels of growth in terms of capex relating to FPS developments.

“The deepwater and ultra-deepwater oil focused developments in Africa and Latin America combined with the generally shallow water gas focused developments in Australasia are expected to account for almost 59% of total FPS capex over the period of analysis,” the report said.

“Towards the end of the forecast, Infield Systems expects to see an increasing number of developments in areas of the world with no prior FPS activity, such as East Africa and the Falklands. Capex growth from such areas is likely to accelerate towards the end of the forecast and, despite initially only accounting for a small share of the market, such areas are likely to become increasingly important after 2017.”

In North America, the ultra-deepwater Gulf of Mexico area is expected to account for 69% of total regional FPS capex.

In the Middle East and Caspian Sea region, capex is split between very shallow developments in Kazakhstan and the Persian Gulf and developments in the ultra-deep waters of the Eastern Mediterranean offshore Israel.

Australia is set to dominate Australasian capex, with only minor capex spending predicted outside of this country.

In Europe, the traditional major producers of Norway and the UK are expected account for 80% of capex. Countries outside the two major producers in Europe, such as Ireland and Romania, are expected to account for a larger share of capex toward the end of the forecast, according to the report.

The FPS market in Latin America will remain dominated by Brazil’s state-owned player Petrobras and its big spending in Brazil; while Africa sees capex directed mostly toward West Africa, with 71% of capex forecast to be focused on FPS developments in Angola and Nigeria.

Asia has no dominant country when it comes to forecast FPS developments, but Malaysia and Indonesia account for the largest market share of capex. Some 79% of the capex for the region is directed to countries in South East Asia, Infield noted.

Shallow Plays Peak

When looking at FPS developments by water depth, the market shows the increasing dominance of deepwater and ultra-deepwater capex over the forecast period, the report said.

Shallow-water capex is likely to peak in 2016, whereas ultra-deepwater capex is expected to remain on an upward curve during the period to 2017.

Ultra-deepwater capex overtook the deepwater market in 2010 and is not set to catch up during the forecast period, Infield said.

“Despite shallow water capex starting to decline post 2016, it is still expected to represent the largest share of the FPS market, driven by developments globally, but focused on Asia and Australasia where the waters are not only shallow, but generally located a significant distance from shore,” the report said.

The ultra-deepwater market is driven by Latin America and North America, while the deepwater market is driven by Africa and Latin America.

“Driven by the rapidly developing countries of Latin America and Asia, the world is set to see energy demand grow significantly over the forecast. In order to meet this demand, operators must continue their search for reserves in harsher, more complex, and increasingly remote locations,” the report said.

“It is this requirement for increased energy production that is driving the move towards far offshore reserves in Australia and Brazil, towards the high sulphur and high pressure and temperature reserves of the North Caspian fields and that has started the gas rush off East Africa, all of which are fuelling increasing activity in the FPS market.”

Asia is expected to see the most platforms installed, but these are mainly targeting the relatively small fields that are left in the South China Sea. Brazil is expected to deploy a large number of expensive FPSOs for the presalt fields, such as Lula and Iara, which are found at great distances from shore.

Australasia, meanwhile, is set to see the installation of platforms in Australia’s shallow waters that are a long distance from shore. These, for example, include Ichthys, Prelude, and Petrel/Tern.

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