A closer look at the FPSO vessel

Floating production, storage and offloading (FPSO) vessels are offshore production facilities with both processing equipment and product storage. FPSO vessels are commonly converted from an old cargo ship with processing equipment on the vessel’s deck and product storage below.

After processing, an FPSO vessel stores oil or liquid petroleum gas before offloading periodically to shuttle tankers or transmitting processed petroleum via pipelines. They are usually connected to the reservoir via flexible pipelines to the sea floor central manifold, and then to the individual subsea trees via in-field flow lines. The in-field flowlines are either flexible pipelines or steel pipelines laid by the reel-lay method or S- or J-lay methods.

Conventionally, the FPSO vessel is not able to store natural gas and this is usually either sent to shore via a pipeline or simply flared off and burnt. However, there are currently developments which are examining the use of a floating LNG vessel which involves both processing and liquefying gas to -161°C, storing it as a liquid, then transferring to an LNG tanker.

As many of the remaining gas fields are located in remote and politically sensitive locations, FPSO vessels are becoming more attractive, as they can enable small, isolated and previously uneconomic fields to be developed. In some cases they are also more attractive than a typical offshore pipeline development in terms of flexibility, risk and costs. In terms of flexibility and risk, if a country or region becomes unstable, the fact that the FPSO vessel is at sea means that it is unlikely to come under attack. The FPSO vessel can also be disconnected and sail away, returning to production once safe to do so.

Offshore pipelines – here to stay

Despite the advantages of using FPSO vessels, current trends indicate that long-distance offshore pipelines will always have their place. A case in point is Inpex Corporation’s Ichthys development, which will be developed with an 885 km long gas pipeline to shore. Incidentally, this project is also part of an FPSO development with gas being exported to shore from the vessel.

Commercially and politically, pipelines remain an important part of offshore infrastructure. If a pipeline is the only piece of infrastructure available to economically transport product to market, the owner will automatically have a monopoly on the resources at the start of the pipeline and on the market at the end of the pipeline.

To give some idea of the commercial drivers involved in these projects, an example comparison of costs between the two options for a field located 200 km offshore is given below. Costs given are only indicative. The cost of drilling, subsea trees, equipment and spools is assumed as the same in both options and ignored. In reality, however, the subsea infrastructure cost will be more for the FPSO option.

Option 1: FPSO without pipeline

The first option is the FPSO option with gas flared at sea and no pipeline to shore. The cost can be estimated to be approximately $400–800 million.

Option 2: Offshore pipeline

The second option is a straight pipeline to shore with no above-water processing facilities and an assumed diameter of 305 mm. The cost of this option can vary depending on pipeline length. The majority of the cost is assumed to be taken up in the cost of the lay vessel with the remainder of the cost in the onshore processing facilities and materials procurement. With a pipeline length of 200 km, a lay rate of 1.5 km per day, and a vessel cost of $1 million per day, the pipeline lay cost is estimated at $133 million. The onshore processing facilities, linepipe and materials are estimated at $300 million. This gives a total cost of $433 million.

As demonstrated above, a conventional subsea tie-back to shore may cost approximately $433 million and an FPSO vessel may cost $600 million. Given the accuracy of these costs, it could be said that both options are similar in cost. The real advantage with FPSO is that it is possible to rent the vessel. Additionally, if the product is highly corrosive, duplex stainless steels may be required, which would make the pipeline option much more expensive. However, FPSO vessels are unable to offload natural gas to another vessel at sea, and where large gas resources are involved, a trunkline to shore becomes necessary to enable sale of the natural gas.

On both sides, there are many cost and engineering variables which will vary significantly between projects and need to be considered on a project-by-project basis. However, it can be said that long-distance pipelines to shore will be around for the foreseeable future.