Of shoreFloating Production SystemsFloating Production Systems The Outlook for The Outlook for New Orders New OrdersBy Jim McCaul, IMABy Jim McCaul, IMAngineering, procurement and construction of ? oating The remaining 75% of the planned projects are in an early production units is a small market in terms of number stage of development. Contract awards are more likely in the E of units – but large in terms of revenue generation. An 3+ year time frame.EPC contract for a production unit can easily exceed $1 bil- lion – and $3 billion for an FPSO has recently been breached. Future Business DriversOverall, this is a $20 to 30 billion annual market. But, as de- The large number of projects at the ready-to-go stage is clear-scribed below, the sector is hitting some headwinds that could ly a positive indicator for future ? oating production equip-impact future business opportunities. ment orders. However, timing of the decision to proceed to contracting will be in? uenced by future underlying market Backlog of Planned Floater Projectsconditions.243 ? oating production projects are in various stages of plan-Fundamentals driving future orders in the ? oating production ning as of beginning May. Of these, 57% involve an FPSO, market remain generally positive. World oil and gas demand 16% another type oil/gas production ? oater, 23% liquefaction continues to grow, crude pricing remains in the $100 to $110 or regasi? cation ? oater and 5% storage/of? oading ? oater. range and deepwater drillers are operating at high utilization. Brazil, Africa and SE Asia are the major locations of ? oating But the sector is hitting competition from shale/tight oil production projects in the visible planning stage. We are tracking and gas supply, energy companies have been cutting capital 50 projects in Brazil, 49 in Africa and 46 projects in SEA – 60% spending budgets and deepwater drillers are not quite as bull-of the visible planned ? oating production projects worldwide.ish as in recent past. Around 25% of the projects are at an advanced stage of development. They typically have either entered the FEED Growing Demand for Oil and Gasphase, pre-quali? cation of ? oater contractors has been initi- On the positive side, global oil demand has grown at an aver-ated or bidding/negotiation is in progress. Award of the pro- age rate of 1.4% annually over the past 20 years. With the duction ? oater contract in these projects is likely within the exception of two years during the global ? nancial meltdown, next 2-3 years. oil demand has increased year over year during this period. Growth in oil demand is widely expected to continue over Breakdown of Planned Projects by the foreseeable future. The IEA, for example, sees world oil Type Production System Requireddemand in 2035 growing to 101 mb/d, an increase of 11% (As of 1 May 2014)over today. Global natural gas demand is also growing. Gas consump-Type System RequiredNumber of Projectstion doubled between 1980 and 2010 and has grown another FPSO 13813% since. Over the past decade global natural gas consump-tion declined in only one year – 2009 as a result of the ? nan-OTHER FPS 38cial crisis. The EIA sees world gas consumption growing at an annual FLNG 31rate of 1.7% through 2040. ExxonMobil projects a 65% in-FSRU 24crease in natural gas demand by between 2010 and 2040.FSO 12Impact of Unconventional Oil and Gas SupplyBut unconventional oil and gas resources are changing the Total 243supply landscape. Use of horizontal drilling and hydraulic May 20148 MTRMTR #4 (1-17).indd 8 MTR #4 (1-17).indd 8 5/12/2014 10:12:12 AM5/12/2014 10:12:12 AM