As deepwater exploration and production grows globally, floating production, storage, and offloading (FPSO) vessels continue to dominate expenditure on floating production systems (FPS). Oil and Gas Facilities’ “Global Market Trends” in April reported that FPSO account for USD 18 billion of the USD 20 billion in FPS spending expected over the next 5 years.
Although there has been a shift toward newbuild FPSO, especially for developments in harsh environments, very large crude carrier (VLCC) tanker conversions remain the basis for projects in areas where benign environmental conditions (mild sea waves and swells) are predominant, such as off west Africa, southeast Asia, Australia, and Brazil. Providing flexibility and mobility, tanker conversions in some cases offer quicker production of first oil.
Recent sales of VLCC tankers suggest upcoming conversions. In March, Maersk Tankers sold the Maersk Eli, built in 2000, to SBM Offshore for approximately USD 32 million. It is the sister ship to the Maersk Lea, built in 1999, and sold to SBM Offshore in November 2011 for approximately USD 34 million.
SBM Offshore has managed the conversion and fabrication process for more than 27 FPS facilities over the past 30 years and has developed a long-term partnership with Keppel Shipyard in Singapore and Dubai. The company has entered joint venture agreements to develop construction yards in Angola and Brazil with local and international partners. The company recently began its first FPSO conversion to be done in China at the Guangzhou Shipyard.
Keppel and its subsidiary Keppel Shipyard and SembCorp Marine’s Jurong Shipyard are also among the leading companies that specialize in fast-track modification and fabrication work
Work for a recent conversion was carried out at Cosco Shipyard in China for Petrobras. BW Offshore’s tanker BW Nisa was converted into the FPSO P-63. In January, the unit arrived in Brazil for its final construction stages, which included the installation and interconnection of 23 process plant modules by the Quip (Queiroz Galvão, UTC, Iesa, and Camargo Correa) consortium and BW Offshore. Petrobras reported the cost at USD 1.3 billion.
The topsides facilities weigh 18,500 tons and provide processing for 140,000 BOPD, associated gas compression for 1 million m3/d, and a water injection facility for 340,000 BWPD. P-63 will operate in the Papa Terra field in the post-salt Campos Basin. The production from 30 oil wells will be transferred to the P-63 from the P-61 platform, the first tension leg wellhead platform of its kind built in Brazil, expected to be installed later this year. Because the subsea layout of the wells needs to be changed to meet environmental licensing conditions, additional work was completed last month on the P-63 in Ilha de Santana, in Macaé. It is scheduled to start production in October.
Keppel’s subsidiary, Brasfels, in Rio de Janeiro, recently completed the final integration for a tanker conversion FPSO, Cidade de Paraty, for SBM Offshore. The vessel, leased to Petrobras, began service in June, on the Lula Nordeste development in the pre-salt area in the Santos Basin offshore Brazil.
Constructed in 34 months, the FPSO has installed topside facilities weighing approximately 14,000 tons to process a maximum throughput of 150,000 BLPD, associated gas treatment for 174 MMscf/D with compression and carbon dioxide removal, and a water injection facility for 150,000 BWPD. Its storage capacity is 1.6 million bbl of oil.
Petrobras ordered three more conversions from SBM Offshore, including the Cidade de Ilhabela with a processing capacity 25% higher than Paraty’s. Petrobras confirmed a USD 3.5 billion fast-track order for FPSO Alpha and Beta, units of the same scale as the Ilhabela, which are destined for the Lula Alto and Lula Central locations off Brazil. Deliveries are expected at the end of 2015 and early 2016, respectively.
SBM Offshore has signed contracts with Shell Offshore to supply and lease an FPSO for the Stones development project in the Gulf of Mexico (GOM). Located in 9,500 ft of water off Louisiana in the Walker Ridge area, the Stones FPSO development will be the deepest in the world, Shell said. It will be the second FPSO operating in the GOM. Petrobras’ BW Pioneer has been producing oil from the Chinook field since September 2012.
Shell’s FPSO will have a processing facility capacity of 60,000 BOPD and 15 MMscf/D of gas treatment and export. No water injection facilities are specified. The Suezmax hull will be able to store 800,000 bbl of crude oil; total topsides weight will be approximately 7,000 tons.
Depending on the economics of the project and its location, tanker conversions to FPSO may be alternatives worthy of consideration. Of the world’s approximately 200 FPSOs, about 60% are converted tankers.
The unique challenges of aging tankers are critical considerations in the design, installation, and maintenance of topside process facilities.
Unexpected challenges arise from the different design practices and codes, quality standards, and maintenance philosophies used by the oil and gas and marine industries. Douglas Kemp, integrity adviser at Hess, said the differences can result in underlying integrity issues for which there is little industry guidance or experience available.
“Using a converted tanker in a regular, more frequent loading and offloading cycle than was originally intended can introduce structural integrity issues to the process and marine piping systems, as well. Infrastructure of varying age coupled with topside modules and piping systems designed according to fixed platform design code also add to the integrity management challenges for such assets,” he said.
In paper OTC 24151 (2013), Kemp described Hess’ processes, practices, and risk application in the development of an integrity management (IM) system for an aging FPSO topside located in west Africa.
Hess assumed operation of the Sendje Ceiba FPSO facility in 2006 to support the depletion of the Ceiba and Okume fields in the Rio Muni basin off Equatorial Guinea. Built as a VLCC tanker in 1977, Bergesen (now named BW Offshore) converted the tanker into an FPSO in 2001 in a fast turnaround project with a short project schedule to produce and export fluids from the Ceiba field. The topside was initially designed and built for an operational life of 15 years, using standard vendor packages and limited modification to the existing ship’s power, cargo handling, and utility systems. Since 2006, more modifications have been made to provide gas reinjection capability, additional water treating, inert gas generation, and to allow for the transfer, storage, and export of Okume produced fluids. The modifications and the tie-in of Okume production required an additional 15-year operational life extension beyond the initial design life.
The vessel's cargo tank capacity is 1.6 million bbl. Production from the Okume and Ceiba fields is commingled in the cargo tanks and exported in parcel sizes of 1 million bbl. Offloading from the Sendje Ceiba to a shuttle tanker generally takes place every 10 days.
Kemp said that Hess has previous experience operating a converted FPSO, having operated the Triton in the North Sea since 1996 (operatorship of Triton was sold to Dana Petroleum in 2012). He said, “Our management practices were derived from our experiences in the North Sea and adapted for the regulatory regime, multicultural workforce, and intricacies of conducting business in Africa.”
He said converted tanker vessels can be cost-effective compared with newbuilds. For the Triton FPSO conversion, Hess had procured a relatively new tanker, 1 or 2 years old. It was in good condition and had not seen a lot of service.
Kemp said that at the time it was possible to purchase a secondhand tanker for approximately USD 36 million. At the same time, a designed, bespoke FPSO built for use in west of Shetland cost upward of USD 400 million for the hull and topsides. The hull alone cost approximately USD 100 million.
He said, “If you’re looking at a newbuild, bespoke hull for USD 100 million, compared to a tanker that’s only 1 or 2 years old for USD 36 million, you still have the same cargo capacity, but it’s only one-third the price. You haven’t had the problem of having to build that hull and it has been built to class in the same way the newbuild FPSO hull would have been. You have a brand-new deck for installation of the topsides, and you can design the topsides and get them integrated while the tanker is being converted. The turnaround and construction time are less, and getting the tanker to first oil is quicker than when using a newbuild hull.”
In assessing a tanker hull, it is important to consider the planned operation requirements for the FPSO. How many years of service are needed? Five, 15, or more? “Going in with an operability frame of mind, looking at all facets of the operation rather than only doing a condition survey is necessary," Kemp said.
Having the right people conducting the due diligence is important. Kemp said it should be done by someone responsible for the operational integrity. Avoid having someone looking only at the areas that are easily inspected and easy to paint instead of inspecting the hard-to-get-to areas. For example, fabric maintenance is an area of inspection that requires knowledge and expertise. “When you see a deck crew painting, how do you know the competency of the crew and the quality of the materials? Are they using coating system-approved procedures? Is an inspection regimen in place? Is it an audited procedure? Putting paint on without appropriate preparation and without a quality managed system can do more harm than good,” he said.
Much of a tanker’s hull damage comes from its service life. The hull has been subjected to short cycle fatigue loads resulting from sea states that are higher than if the hull were in a single location in a constant sea state. Kemp said, “A lot of the life is used up in a tanker by the time you get it, especially if you’re taking a tanker at 20 or 30 years old, one that’s at the end of its life. You’re trying to eke the last years out of it and relying on its repurposed operation taking place in a benign environment.”
Even a benign environment can present problems. If the converted tanker is offloaded every 7 to 10 days, the frequency of offloading is higher than during the hull’s service as a tanker. The original tanker was not designed for such load cycle variation. As a tanker, its load was in a static condition during transit time, and the load cycle was approximately once per month.
Kemp said that the short-cycle fatigue problems can also affect the topsides. “If you imagine the ship/tanker as a box beam, it is going to bend up and down. The pipework and modules run along the length of the hull. If continuous pipelines are run along the hull, they will be subjected to a lot of stress. That needs careful consideration in the design of expansion joints. At some point, you will need to do repair or intervention.”
Designing the facilities with the need to repair in mind can reduce later problems with gaining access to critical areas. However, in a fast-track conversion project, when an operator is rushing to first oil, the development teams are thinking about getting things built quickly to get to the oil. Kemp said, “The reliability side of it is a sideshow. That’s endemic throughout the industry."
“Although it may be more costly at the time, design the facility with the need to repair it in mind, rather than for the ease of installation and building. For example, the temptation is to use the original hull or the original tanker cargo manifolds as a distribution system. If modules are placed on top of those areas, access will be difficult later, if repairs are needed. With a module overhead, you can’t easily get to the manifolds, it’s a congested area, and there is no crane access. If you try to move 10- or 16-in. spools in that setting, there is a real problem,” Kemp said.
Another example of a design consideration is the avoidance of locking off systems on the main deck that can be a single point failure, such as the offload and cargo systems, or the firewater system. Firewater must be made available to the processing modules. If a firewater header originally designed for the tanker is used, when intervention work is required on a module, the entire water supply system must be interrupted. Instead, a ring main system should be designed to avoid cutting off the water supply to all modules for repair work on a single module.
The environment in which the converted tanker will operate is a critical consideration for assessment and management of integrity. The Sendje Ceiba operates in a 28°C, humid, saline environment. Kemp said, “We saw corrosion rates of 1 mm per year, which is exceptional.” The environment coupled with the off-the-shelf module’s generic piping design, which was Schedule 40 or Schedule 20, meant that little corrosion allowance was built in. “At that rate, there was not a lot of time to get on top of the corrosion problems. It was managed with a comprehensive fabric maintenance program. Otherwise, something that looked good on Day 1, quickly gets out of hand.”
Hess has an IM team dedicated to the Sendje Ceiba. Kemp said that in cases throughout the industry, when an IM program is run by a facility’s regular maintenance and operations crews, they often do not have the required time or the dedicated focus.
Although IM is an operational activity, it needs to be resourced and managed independently to some degree to avoid being compromised by the accountability for the oil production rate. Placing the responsibility for IM on a maintenance supervisor means that he or she has a conflict of interest, Kemp said. Ensuring life extension, safe, or economic operation sometimes means taking a short-term hit on production. Having someone responsible for IM who is not compromised may make decision making straightforward and easier.
Hess built up the IM team gradually by direct engagement with the operations team. The IM team was integrated into the asset operations, but was not loaded up with operational functions. An IM manager is based in Equatorial Guinea, working day-to-day with the operations manager. Kemp said, “We have a voice in the operational meetings.”
He added that support for an IM team is needed within management, such as a high-level integrity director, for strategic planning. However, the team must be embedded at the tactical level with operations. “If it is only done at the higher level and dictated down, you don’t get the engagement of the offshore people.”
Engagement with the facility operations staff allows the IM team to know the goings-on at the facility and how they change over time. Kemp said, “Operations, the environment, and the condition of the facility are not static. If IM assessment is being done remotely with reliance on people who aren’t closely engaged with it, it becomes a more difficult task to determine the integrity status of the facility, or what the likely integrity status is going to be as conditions change further.”
OTC 17506 Selection of Trading Tankers for FPSO Conversion Projects by P. Biasotto, V. Bonniol, and P. Cambos, Bureau Veritas.
OTC 23976 A Risk-Based Approach to Managing the Integrity of an Aging FPSO Hull by S. Hagood, Hess, and C. MacLean,Marine Technical Limits.
OTC 24151 A Risk-Based Approach to Managing the Integrity of Aging Floating Production Storage and Offloading Topsides by Douglas Kemp, Hess.