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Braving New Waves Together: Glowing Prospects For FPSO Conversion


BRAVING NEW WAVES TOGETHER 

Celebrating 40 Years of ASMI
World-Class Industry
Premier Centre For Ship Repair And Conversion
Glowing Prospects For FPSO Conversion
Offshore Bonanza 
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A Complete Maritime Community 
Developing Human Capital
Safety First
Leveraging On Technology 
Battle For Hearts And Minds

 

 BRAVING NEW WAVES TOGETHER

Glowing Prospects For FPSO Conversion

 

Conversion Capital

Singapore is the conversion capital for FPSO. Since its first project in 1981, it has completed over 130 conversions in 2007, which translate into a commanding 70% slice of the world’s FPSO market. 

 

“We are, in Singapore, the world’s largest FPSO conversion location by far. Combined with Sembcorp Marine and us (Keppel O&M), we hold probably 70-80% at any one time. And the reason is many folds – we have a lot of experienced people, we have a good track record and our logistics continue to be good in these areas, and our costs continue to be competitive,” said Mr Choo.

 

Singapore shipyards can now provide the full range of FPSO conversion requirements, from engineering to construction, outfitting and commissioning. “Our expertise is quite well grounded in terms of numbers and depth of experience,” said Mr Chia. This wealth of expertise and experience has made it difficult for the competition in the Middle East and China to replicate. 
 

Early Lead

Singapore enjoyed an early head start in FPSO conversion when Keppel Shipyard was commissioned by Single Buoy Mooring Inc to convert a 127,244-dwt tanker Mariblanca into FPSO II for operation in the Philippines Cadiao Field in 1981. Its forte in tanker repairs and its ability to take on major projects made Singapore an obvious choice for what was then a fairly novel concept. The Mariblanca was the second FPSO conversion to be undertaken worldwide.

 

“The conversion of the Mariblanca into FPSO II drew on the collective strengths and experience of Keppel’s family of yards. Keppel Shipyard was well-versed in converting a variety of large vessels from livestock carriers to drillships. Keppel FELS, then Far East Levingston Shipbuilding, contributed its rich offshore experience and keen understanding of the oil companies’ requirements,“ said Mr Tong Chong Heong, ASMI Past President, 1995-1996, and Managing Director and Chief Operating Officer of Keppel Offshore & Marine, who had an instrumental role in the project.

 

“Not many yards in the world at that time had the appetite or ability to undertake a conversion project of such scale and complexity. The success of FPSO II later earned Keppel and Singapore a solid reputation for project management and execution, and above all, for delivering on our promises. It also paved the way for many more FPSO conversions to come,” Mr Tong added.

 

FPSOs soon gained currency as the vehicle of choice for work in marginal fields over other floating production systems. The ability to provide field storage enables them to be used independently of fixed installations. Conversion was preferred over a newbuild, especially for short-term deployment in benign environment, as it was far more cost effective than a newbuild.

 

By the end of the 1980s, Singapore had clinched the highest number of FPSO conversions – an unassailable lead which it has maintained to this date.     

 

Scaling Up

Improvements in FPSOs have expanded the limits of their capability. Initially developed for small, shallow-water development fields, FPSO technology has been embraced as the brave new frontier in offshore development. Improvements in mooring systems have enabled modern-day FPSOs to plumb new depths of up to 1,500 metres, with possibilities of crossing to the next frontier, the ultra deep waters of the Gulf of Mexico.

 

FPSOs are even being considered for deployment in the United States by regulators after hurricanes Katrina and Rita damaged and destroyed over a hundred fixed platforms and several jack-up rigs when they swept through the Gulf of Mexico in late 2005. Unlike a permanently moored unit, an FPSO can be disconnected and moved out of harm’s way when the need arises.

 

Through their close contact with engineering and oil companies, and offshore contractors over the past three decades, Singapore shipyards have kept pace with advancements in FPSO technology. This has made them the prime candidates to undertake complicated or pioneering projects, such as the conversion of a LNG vessel into the world’s first LNG Floating Storage and Re-Gasification Unit by Keppel Shipyard.  

 

Conversion is the preferred option for many ship owners and oil majors. In the past, the fastest and most cost-efficient way is to convert an old tanker, which had limited prospects for employment. But as the old single-hull tankers are largely used up, some owners are even sending brand new double-hull tankers for conversion to FPSOs. Over the years, the size and complexity of FPSO conversions have grown and Singapore have responded well to market needs in this niche area.

 

In a fast-track conversion, where concurrent engineering is undertaken, Singapore shipyards can complete the project in less than 12 months. It would take much longer to build a new unit, especially under present market conditions where all the major shipbuilding yards in the world are heavily booked.

 

Advantage, Singapore

The complexity of the work in a FPSO conversion requires superb teamwork and close collaboration between the principal players and the sizeable supporting cast of suppliers and sub-contractors. During a conversion project, there can be 500-600 workers on board the vessel on an average day, doing the necessary upgrading, modification and fitting work. As the project progresses towards the peak, usually two to three months before completion, as many as 1,000 workers may be involved.

 

By honing this capability to a fine art, the industry has given its customers, and the customers’ customers, the assurance they need. Customers have returned again and again, often committing more jobs with bigger contract values.

 

While the numbers vary, industry analysts have forecast that the FPSOs required are headed one way – up. This augurs well for Singapore with its established reputation in project execution of FPSO conversion. As James R. McCaul, President of International Maritime Associates Inc, told The Business Times in March 2008, “It’s a great business – and for the foreseeable future, there is no end in sight to the booming orders. We believe the growth in production floaters is at the exponential stage.”

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