FPSO APPROVAL FOR GULF OF MEXICO AN IMPORTANT STEP

It was so long in coming and so certain to occur that the oil and gas industry might not have taken appropriate note of what the US Minerals Management Service did on the last day of 2001.

On Dec. 31, the MMS published in the Federal Register its approval of the use, in the Central and Western Gulf of Mexico, of floating production, storage, and offloading (FPSO) systems for development of oil fields.

Until now, the federal government has been wary of FPSO systems, most of which use ship-shaped hulls to store oil produced from wells completed on the seabottom for transfer into shuttle tankers.

FPSOs have economic advantages over other development schemes for oil fields in deep water or far from pipelines. One important advantage is speed of installation.

Although more than 70 FPSOs are operating safely around the world, the US has been slow to embrace the technology. Even after the MMS warmed to it, no operator has yet applied to install an FPSO in the Gulf of Mexico. One reason is the fear that environmental opposition would prolong permitting, erasing the economic benefits of rapid installation.

MMS helped with the permitting problem last February. It issued an environmental impact statement concluding that FPSOs likely to be used in the central and western gulf present environmental risks no greater than those of other development systems. Most of the risks of oil spills come from the shuttle tankers that would carry production ashore.

The February MMS report doesn't remove the need for environmental assessments for specific projects. But by addressing the technology it is believed likely to streamline the process.

The MMS studied a "hypothetical, generic FPSO" with a ship-shaped, double-hulled storage vessel able to handle 3,000 b/d of production and to store 1 million bbl of crude oil.

Formal MMS approval of FPSOs doesn't mean operators will abandon the tension-leg platforms, spars, and other innovations enabling them to develop oil and gas fields in ever-deeper water.

But it creates an important option for evaluating discoveries and planning development.

International Maritime Associates Inc. (IMA) has identified 165 potential development sites in Gulf of Mexico waters deeper than 5,000 ft. Half of those sites have seabed conditions certain to hamper pipeline installation. And for any ultradeepwater pipeline, flow assurance is a problem.

Where pipeline construction and operation are difficult and expensive, the availability of FPSO technology can mean the difference between development and abandonment of an oil discovery. The same applies to discoveries in shallower water far from existing pipelines.

The MMS is certain to result in oil and gas production that would not have occurred otherwise. It is, therefore, important not just to the producing industry but also to national energy supply, to working people, to government treasuries, and to the national economy.

(E-mail the author at bobt@ogjonline.com)

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