The Business of
FPSOs, Shuttle Tankers and Peter Lovie

More than 200 people from all parts of the world attended the 10th Annual FPSO Congress in Singapore

The discussion panel on Day 1 

Left to right: Hasan Basma, CEO of Bumi Armada in Kuala Lumpur; Ming Yao Lee, Team Manager, Offshore & Marine Structures with Chevron in Houston; Julian Callanan of Infield Systems in London; Sven Larsen, CFO of Prosafe in Singapore and Peter Lovie from Houston

Taking a break Peter Lovie on left, with Daniel Chen, marketing manager for IQPC

Bluewater alumni compare notes Jesse Van de Korput, now SVP at Bumi Armada in Kuala Lumpur; Peter Lovie from Houston

Dynamically Positioned FPSOs 

Peter Lovie delivers a double length technical and commercial presentation on this niche market

FPSOs in GoM - the 14 year journey

Peter Lovie on the long history behind the first FPSO in US GoM and what may be ahead

Opening Remarks

Welcome everybody. I'm Peter Lovie and IQPC have asked me to chair this conference. These commercial conferences are valuable for learning what is really going on in the industry. There's a serious difference between conferences organized by a technical society and one from a commercial conference organizer - it's the fee that is charged for these commercial conferences. It filters out who is here – your company has to be genuinely serious that you
should be here and that you are at a senior enough level to really benefit from the investment!

This is the third commercial conference on FPSOs that I've been asked to chair and speak at in the last eighteen months, and I learn a lot from them. Sure, it's a great way to keep up to speed about FPSO, but it's about people and ideas and change.

A lot has changed in these eighteen months. From happy boom times it feels now to me like the uncertainties of 1998 when the supermajors were laying off in Houston. It's been happening again in the last few months with layoffs at BP and Chevron and the Shell guys are sweating right now. These companies don't like to talk about it too much. I was working at Devon, the largest of the US independents - and enjoying it - but they went through a big re-organization in June, reducing their exposure to the high risk high return Lower Tertiary trend in the Gulf of Mexico where they had almost as large a position as Chevron but of course Chevron has five times the market cap of Devon. Devon is not selling out but selling down. So a bunch of us in
deepwater projects and planning were not needed any more, and that's why the agenda for this conference says that I am "Ex Devon". However as people say, "it's an ill wind that blows no one any good" and I'm now on new business, asconsulting advisor on floating systems for Vanco Energy Company of Houston, a deepwater explorer offshore West Africa and Ukraine.

Another disquieting sign in our industry is the current status of the world's FPSO fleet and the number of FPSOs without contracts. I count 183 FPSOs in the world, either existing or being built or converted in a shipyard, with 83 of these owned by oil companies and the rest of them, 99, being owned by contractors and leased to oil companies. I count 8 FPSOs building on speculation, still without work commitments and then there are 9 more FPSOs currently idle and off location. So there's 8+9 out of 99 that are out of work: 17%, that's huge. It's never been that high a proportion before. And this is not allowing for any FPSOs known to be coming idle very soon but that has not been announced.

This large an idle fleet harkens back to the 1990s with drilling rigs and the years of adjusting and consolidating in the industry. But FPSOs are not the same as drilling rigs. Each oilfield is different and each FPSO may need more modification and more investment for the next assignment than typically happens with a drillship or a semi. At today's shipyard prces it may be economic to build an FPSO conversion rather than adapt one of these idle FPSOs – that's part of the economic predicament for owners of these idle FPSOs.

Simultaneous with all that equipment being without work, oil company inquiries for FPSOs have slowed way down - other than the amazing world of Petrobras. So tomorrow does not look too good in today's FPSO world. It conjures up what the Vince Lombardi the American football
coach said about "when the going gets tough the tough get going". Hey, with FPSOs, the going is getting tough.

So with that cheerful note, on now to the first presentation today on the "Market Outlook: The Future for the FPSO Market", from Julian Callanan of Infield Systems Ltd.

Agenda