FPSOs play a key role in deepwater oil and gas production. A Douglas-Westwood (DW) analysis of FPSO projects found cost overruns of nearly 40% and average project delays exceeding one year for some. In response to this DW recently brought together twenty companies from across the FPSO supply chain in a round table session to identify the challenges facing the sector:
- Capital cost escalation: “Where you do save is to look at the whole development, not just the production system” – Major E&P Company.
- Variance in guidelines from operators: “There are so many standards and requirements that this drives the cost up considerably” – EPC Contractor.
- Variance in regulations worldwide: “US regulation requirements in the Gulf are a driving factor behind cost increases” – Equipment Supplier.
- Poor presentation of specification by operators: “Requirements are presented in stacks of documents. This is very difficult for contractors to deal with and makes the process side of the business much more expensive” – Major E&P Company.
- Over-engineering and scope creep: “Scope creep happens all the time in every project. This may be necessary but it will always delay the construction process” – Shipyard.
- Supply chain concerns: “It’s a highly complicated supply chain, [but] major clients that come to us understand the problems” – FPSO Leasing Contractor.
- Local content requirements: “Changing of specifications [for] local content are major concerns. Local content is an understandable requirement but partners need to be consistent” – Offshore Contractor.
- Contracting challenges: “Nobody else signs 15 year contracts. We don’t enjoy the upside when rates are high and operators complain when we demand higher dayrates at the end of the contract” – FPSO Leasing Contractor.
The team also identified potential solutions to these challenges – which will be discussed in the next DW Monday. Contact information is available below if you would like a detailed summary of the findings from this industry round table.
Adapted from a press release by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/30062014/dw_monday_fpsos_challenges_in_the_fpso_supply_chain/