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A large number of floating production, supply, and offloading units (FPSO) leases are set to expire in 2022 according to new analysis from energy market research and consultancy firm Westwood Global Energy Group. The average yearly expiring FPSO contract since 2015 has been around three; however by the end of next year, a potential of 30 units could become available. Westwood's Global Floating Production Systems Market Report report notes under a scenario where no contract extensions are taken on current leased FPSOs, 14 additional units would become available in 2022. Alternatively, if all available extension options were taken, nine units would come off contract, adding to the 16 units currently awaiting upgrade or redeployment. Of those coming off contract in 2022, 36% are 40 years old and are potential candidates for scrapping.
Argos, a semisubmersible, floating production platform, will be the company's fifth operated platform in the Gulf of Mexico and the first new platform since Thunder Horse began production in 2008. BP estimates it will increase the production capacity in the region by 25%. On 12 April, BP announced its arrival at the Kiewit Offshore Services fabrication yard in Ingleside, Texas, after safely completing its 16,000-mile journey from South Korea. It will be the centerpiece of BP's $9-billion Mad Dog 2 project. Kiewit will perform the final preparatory work and inspections on the 60,000-ton platform before it continues its journey to the Green Canyon area about 200 miles south of New Orleans, where it will operate in 4,500 ft of water.
Murphy Oil has closed the sale of its 50% stake in the King's Quay floating production system (FPS) and associated export pipelines to a fund managed by ArcLight Capital Partners. The unit and associated laterals will be co-owned in a joint venture with entities managed by Ridgewood Energy Corporation, including ILX Holdings III. Murphy is no stranger to selling off interest in its deepwater platforms. In 2003, the company and its partners sold a 50% stake in its Medusa spar to Oceaneering for $45 million. The King's Quay unit is more than 90% built at Hyundai Heavy Industries in South Korea and is scheduled to go into service in mid-2022.
While the focus on the growing floating gas industry is firmly on output, the industry needs to ensure safety, compliance, and profitability of high-value, complex, floating gas assets, some of which operate close to high population densities. Effective asset-integrity programs are a key part of such an effort, and it is widely agreed that better use of data and robotics will help reduce unnecessary work and human risk. The complete paper describes a joint industry approach for addressing asset-integrity management challenges that has proved successful for floating production, storage, and offloading vessels (FPSOs). Traditional cost-reduction strategies of prior lean market periods are no longer accepted by the industry, which the authors say needs to implement permanent cost reductions, increased sustainability and efficiency, and improved safety. These can be achieved only by new ways of managing asset integrity, targeted at consistent low price and efficiencies and developed, supported, and accepted by all sectors of the industry.