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 equipment to extract crude oil from the earth’s surface. This equipment is known as oil rigs and is available in different configurations depending on the nature of the oil field and type of operation. Oil is extracted through processes called 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 upstream segment. Deep water 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.
Let us 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 has to 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.
From the above picture, one can see that there are two types of offshore drilling platforms, i.e., fixed drilling platform and movable or floating drilling platform. Since it requires a stable base on which the facilities and equipment can be mounted, which underwater environment cannot offer, artificial land-like platforms are created. Movable offshore drilling platforms provide flexibility in operations as 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 which are used as trial wells to ascertain the quantities of oil reserves present in a particular area. Once the presence of good measure of oil reserves is established, a more permanent structure depending on the depth of drilling required is installed for commercializing the production operations.
As upstream business is capital intensive the time needed to drill an exploratory well to commercialization of production is significantly long, and oil organizations are cautious in their investments in upstream ventures. They start by drilling exploratory wells with small budget once they are convinced there is presence of oil & 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.
Once the decision is taken to establish permanent oil drilling platform, as started before, 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.
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 and 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. FPSO concept facilitates oil companies to explore oil in more remote areas and in deeper water in the most economical way than other 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 facility unlike other production systems which require transportation of products to shore tanks through pipelines. FPSO also has other hosts of full-fledged facilities such as living quarters to provide accommodation for offshore personnel, a temporary refuge, administrative and emergency control rooms, offices and dining & recreation lounges, etc.
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 choice of 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 FPSO environment. From production perspective, it is a daunting job to maintain production assets so that their uptime is ensured to maximize production. Also, like any other upstream operations, FPSO operations are also covered by extensive regulatory requirements which demand strict compliance to policies, procedures, recordkeeping and reporting.
With the above, one would now have a fair idea as to what is the key difference between MOPUs and FPSOs. To summarize, movable offshore drilling units are employed as a pre-commercial activity mainly while drilling the exploratory or test wells to ascertain the quantum 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 as they are integrated production platforms with wide-ranging secondary facilities such as storage & transportation, and office & administrative amenities.