Upstream operations are complex and highly technical in nature. Over time upstream technology has evolved and the oil & gas industry is constantly searching for new technology to enhance oil recovery. Upstream operations deploy complex oil rigs that are available in different configurations depending on the nature of the oil field and type of operation.

Offshore Drilling

Oil is extracted through drilling operations. Drilling is broadly classified into two categories, i.e., onshore and offshore drilling.

Onshore drilling refers to the drilling of deep holes in the earth’s surface in order to extract oil and gas resources while offshore drilling relates to the same exercise underneath the seabed. This means that offshore drilling is a very complex and challenging operation in the upstream segment. (Learn how to overcome some of the challenges in Asset Integrity Management Key for Smart Operations.)

Deepwater drilling is capital intensive, strenuous and environmentally challenging. Interestingly, both onshore and offshore operations require the same kind of equipment, set of machinery, etc., but the operating environment is very different. Offshore drilling requires sustained capital investments due to the fact that it is more intricate and challenging.

Technological Requirements for Offshore Drilling

Let's look at the technological advancements in drilling techniques adopted in underwater (offshore) drilling. The drilling platform to be constructed is determined based on the depth at which drilling must be carried out in a particular oil field. For example, consider the picture below. If the depth of the drilling is less than 500 feet, then a fixed platform on the seabed is employed. On the other hand if it is above 1500 feet but less than 6000 feet, a floating production system is used to extract oil. The prime driver for use of different platforms is the depth at which drilling is to be done to produce oil.

Diagram of different types of offshore drilling platforms

From the above picture, one can see that there are two types of offshore drilling platforms, i.e., fixed drilling platforms and movable or floating drilling platforms.

Since the platform requires a stable base on which the facilities and equipment can be mounted, artificial land-like platforms are created because underwater environment cannot provide this functionality. Movable offshore drilling platforms provide flexibility in operations because they can be moved from one place to another and they are cheaper to build. Also known as Mobile Offshore Production Units (MOPU), they are mainly deployed to drill exploratory wells that are used as trial wells to ascertain the quantities of oil reserves present in a particular area. Once the presence of a sizable quantity of oil reserves is established, a more permanent structure (depending on the depth of drilling required) is installed for commercializing the production operations.

The Business Side of Offshore Operations

Because upstream business is capital intensive and the long duration between drilling an exploratory well to commercializing the production, oil organizations are cautious in their investments in upstream ventures. They start by drilling exploratory wells with a small budget once they are convinced of oil and gas reserves through geological studies. Once they determine that there are huge oil reserves they go in for rigorous capital deployment to exploit the oil reserves.

Floating Production Storage and Offloading (FPSO)

Once the decision is taken to establish a permanent oil drilling platform, the type of platform to be built depends on the depth of drilling to be done. Floating Production Storage and Offloading units (FPSO) are generally deployed when the drilling depth is above 1500 feet but less than 6000 feet. This subsea drilling system consists of a production unit and storage & offloading unit.

Diagram of deepwater floating production systems

Floating production systems are semi-submersible drilling rigs. They contain petroleum production equipment as well as drilling equipment. Vessels known as drillships can also be used as floating production systems. They are positioned on the seabed with heavy anchors, although it is possible to maneuver these platforms around as needed. With a floating production system, the wellhead is actually attached to the seafloor once the drilling is completed, rather than being attached on the platform.

Once oil is extracted it is transferred to cargo tanks in the FPSO ship’s hull. Treated gas is used as fuel for power generation on-board. Additional gas is transported through pipelines attached to the vessels to the shore tanks. The FPSO concept facilitates oil exploration in remote areas and in deep water in the most economical way possible other than technologies like fixed drilling platforms.

The key feature of FPSO is its in-built storage and offloading facility. It enables transportation of crude oil and natural gas to end users such as refineries, gas liquefaction plants, etc., straight from offshore production facilities unlike other production systems that require the products be transported to shore tanks through pipelines. FPSO also has full-fledged facilities such as living quarters to provide accommodation for offshore personnel, a temporary refuge, administrative and emergency control rooms, offices, and dining and recreation lounges.

While FPSOs are the preferred choice of offshore drilling platforms, especially on marginal fields due to their ease of installation and flexibility to take crude oil directly to the refinery, there are challenges in operations. Some challenges are in the areas of people, plant and procedures. Retaining skilled and experienced people is a big task in upstream operations particularly in an FPSO environment.

From a production perspective, it is a daunting job to maintain production assets to maximize their uptime. Also, like any other upstream operations, FPSO operations are also covered by extensive regulatory requirements that demand strict compliance to policies, procedures, record keeping and reporting.


To summarize, movable offshore drilling units are employed as a pre-commercial activity mainly while drilling the exploratory or test wells to ascertain the quantity of hydrocarbon (oil and gas) reserves.

Floating production and storage units are part of the technology deployed when oil drilling organizations require complete commercialization of upstream drilling because they are integrated production platforms with wide-ranging secondary facilities such as storage, transportation and office administrative amenities.