It will be some time before floating production, storage and offloading (FPSO) vessels find a home in the Gulf of Mexico.

Regulatory barriers to the deployment of FPSOs in the Gulf of Mexico largely have been removed with the US Minerals Management Service (MMS) confirmation in January that their use offers no greater impact than any other floating production system.
But expert opinion within the industry confides the use of shuttle tankers still must be proven prior to deployment of a ship-based floating production system - one of the reasons the MMS and US Coast Guard have been so careful in their consideration of FPSOs.
The MMS decision effectively gave the green light for the use of FPSOs in the central and western Gulf of Mexico after the completion of an environmental impact assessment on the general principle of their use in the Gulf. That study was based on a generic concept involving a permanently moored, ship-shaped FPSO with up to 1 million bbl of oil storage capacity.
The record of decision made public then was careful to say only specific FPSO applications for the US Gulf of Mexico would be considered. "While this programmatic level decision does not approve any specific FPSO site or project, it provides a foundation for considering a specific request by a company to use an FPSO for a project," said the acting director of the MMS, Lucy Querques Dennet. "When a specific project is applied for, MMS will conduct a site-specific environmental assessment as well as a project-specific technical and operational review before a project is approved."
Dennet noted that since a base-case environmental impact assessment already has been carried out, projects that fall within the base-case specification, such as a permanently moored 1 million-bbl storage unit, could be considered in less time.
Carolita Kallaur, associate director for Offshore MMS, also said there were about 100 discoveries in the central and western Gulf of Mexico where FPSO units might be used: "Sometimes these discoveries are small, and sometimes they are distant from existing infrastructure. These types of discoveries represent potential use of FPSOs to produce oil and gas resources that would not be developed using current technology and infrastructure. This decision simply gives the industry the opportunity to submit a plan to use an FPSO for a specific project, and gives the MMS the ability to consider this type of development project."
Speculation remains about which field discovery in the US Gulf will welcome the first ship-based FPSO, with talk at this year's Offshore Technology Conference (OTC) revolving around Unocal's Trident discovery.
Unocal discovered Trident in January 2001 with the Discoverer Spirit drillship in Alaminos Canyon Block 903, in 9,687-ft (2,953-m) waters. This well encountered 300 ft (100 m) of hydrocarbon pay zone with 40° API oil in a structural closure spanning 10,000 acres across seven Alaminos Canyon blocks, said Mike Bell, vice president of Unocal's deepwater unit in the US Gulf of Mexico. This deepwater well was drilled to a depth of 20,500 ft (6,250 m) 135 miles (217 km) southeast of Corpus Christi, Texas, remote from any infrastructure.
Unocal is operator of the find with a 59.5% working interest . Chevron has 15%, Ocean Energy 12.75%, Agip 8.55% and Phillips 4.2%
However, Bell was understandably circumspect regarding his company's plans for the use of floating production units, and he declined to indicate if Trident was an FPSO candidate.
Where in the US Gulf could the first FPSO go? For Bell, it could be the northern Atwater Valley area, southern Green Canyon, southern Garden Banks and Alaminos Canyon.
A third appraisal well on Trident is due later this year, said Bell. He declined to go beyond that in indicating the future for Trident.
Allan Millmaker, business development manager for Bluewater Offshore Production Services in Houston, concurred with Bell in the belief that Gulf FPSOs are some way off, at least beyond 2005."That is the earliest, because of the lead time," said Millmaker, who was addressing the future of FPSOs in the US Gulf at OTC.
Millmaker revealed the Navion Munin FPSO operating on the Lufeng 22/1 field in the South China Sea is due to be depleted by 2003, and Bluewater as vessel owner - after buying the unit from Navion in 2001 - is looking for a suitable location to redeploy the unit. The vessel produced 33.1 million bbl of oil during its service life at that field, and Millmaker said it would be "very suitable" for redeployment in the US Gulf.
However, Millmaker and Bell believe much of the work still needed to make FPSOs acceptable to the MMS and the US Coast Guard revolves around the various regulatory responsibilities split between those two authorities.
Unocal sees three issues, all related to shuttle tankers, that must be addressed before FPSOs are used and proved in the Gulf: the design and operating practices that need to be formulated for shuttle tankers; the interaction between shuttle tankers and FPSOs; and the development of a shuttle tanker market. Not every operator of FPSOs in the Gulf necessarily wants to own a fleet of tankers, so a lease market must evolve.
Benefits
For Bell and Unocal, as well as other operators, big benefits can be gained from deploying FPSOs in the Gulf, beginning with the reduced cycle time that FPSOs can offer - sometimes as little as 3 years or less for a reused unit. FPSOs offer lower capital costs than other installations, Bell said, while also offering lower oil transport costs and marketing flexibility compared with a long-distance pipeline. With a large deck area, a large payload and a lower payload cost per ton, FPSOs offer higher efficiency as well.
They offer more easily expanded processing facilities; in the event that new discoveries nearby need to be tied in, spare well slots can be used. They also are reusable and can provide financial flexibility for an operator, especially if they are leased rather than owned.
Operational experience
In the North Sea the use of FPSOs has a long history - 22 units deployed since 1986 - and contractors operating units there will be keen to jump at the US Gulf opportunity when it arises with the benefit of years of operational experience at their backs.
And UK FPSO operators have the benefit of a new set of design guidelines put together by the UK Offshore Operators Association that distills the knowledge gathered from operating these units in the North Sea, where this system was pioneered for harsh environment conditions.

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