What Is Floating Production Storage and Offloading (FPSO)?
Floating production storage and offloading (FPSO) refers to a floating vessel located with reference to an offshore oil field, where oil is processed and stored until it can be transferred to a tanker for transporting and additional refining. FPSOs can range in building from a reworked former supertanker to a brand spanking new purpose-built vessel. This kind of vessel used for natural gas is known as an FLNG, fast for floating liquefied natural gas.
Key Takeaways
- Floating production storage and offloading (FPSO) is a time frame that references a floating vessel with reference to an offshore oil field where oil is processed and stored until it can be transferred to a tanker.
- The identical of natural gas is known as floating liquefied natural gas (FLNG).
- The decision for for FPSOs has higher over time as a result of the declining value of new onshore oil discoveries and stepped ahead era bearing in mind easier get entry to to deepwater oil reserves.
- FPSOs have many benefits when compared to typical offshore oil platforms, paying homage to lower costs and better leasing words bearing in mind further flexibility.
- In areas where there’s no pipeline infrastructure or where pipelines are cost-prohibitive, FPSOs are specifically in name for.
Working out Floating Production Storage and Offloading (FPSO)
Name for for new-build and reworked FPSO vessels has higher as a result of the declining value of new onshore oil discoveries to historic low levels and in addition from era that permits setting pleasant deepwater oil exploration in strange ocean depths.
FPSOs are in particular useful in newly established offshore oil spaces where there’s no pipeline infrastructure in place, or in some distance flung puts where building a pipeline is cost-prohibitive. The use of FPSOs implies that a tanker needn’t sit down down idle while a producing facility produces enough oil to fill it. Moreover, the good thing about FPSOs over pipelines is that when an oil field has been exhausted, the vessel will also be moved to each different location. In recent years, there are about 225 such vessels operating global.
Benefits of Floating Production Storage and Offloading (FPSO)
FPSOs have moreover become further not unusual throughout the oil industry because of their inexpensive value relative to traditional offshore oil platforms. Capital expenditure for a high-production purpose-built FPSO for a large field offshore of Africa is spherical $700 to $800 million.
By the use of comparison, the everyday price for the standard offshore oil-drilling rig alone is more or less $650 million. This amount does not include well of completion costs, ongoing facility production maintenance costs, and platform decommissioning costs (the cost of eliminating the platform at the end of its useful life).
Oil firms are keen on FPSOs because of the words of their use. Ceaselessly, FPSOs are leased by means of oil producers. This has two advantages. First, oil firms have higher flexibility to regulate mounted production belongings depending on market conditions. If sought after, firms can take on or offload FPSOs to satisfy changing production needs. This is more difficult with mounted belongings that take time to build and finance.
2nd, oil firms can upper arrange their balance sheets with leases. Leasing lets in firms to use infrastructure without increasing debt or leverage. By contrast, if a company needed to self-finance an FPSO instead of leasing it, this is in a position to be finished by means of increasing on-balance sheet debt, which can adversely have an effect on a company’s financial metrics and ratios.
In spite of everything, FPSOs are suitable for plenty of water depths, environmental conditions, and will also be designed with the potential for staying on location for stable operations for twenty years or longer. This higher flexibility and versatility makes FPSOs the most well liked offshore production manner throughout the oil industry nowadays.
