Jonathan Petit asks: is the industry ready to tackle its Achilles’ heel on oil transfer?
Energy is indispensable for modern life. In fact, energy demand is set to skyrocket from developing economies to meet the demands of a growing global population. But with continued pressure to produce more energy with lower costs, the oil & gas industry faces a challenge: how can it maximise new opportunities safely and in a commercially sustainable way?
Budgets are under pressure with all-time highs for raw material energy costs coupled with a scarcity of skilled professionals throughout the supply chain. The pressure is to do more with less and to, ultimately, show how the industry can provide the energy solutions and expertise required to keep up with demand.
Now more than ever, it is crucial that we support products throughout the value chain, from operators to procurement departments, that can deliver the desired results while considering safety, environmental targets, and reliability. Yet, these innovative and proven products seem to receive a mixed reception, with some groups benefiting today from the technology while others lock themselves into a cycle that focuses on short-term over long-term gains.
The need for nuance
So, what is holding back the oil & gas industry, particularly the floating production storage and offloading (FPSO) sector, from utilising proven, progressive technology? To put it simply: outdated regulation.
Currently, there are three types of hoses in use today. The single carcass features a single tube, spiral reinforcement, and cover layers. Meanwhile, a double carcass is specifically engineered with two carcasses, while the dual carcass features a unique structure composed of two independent carcasses made of steel cable layers. As a result of decades-old regulation, the difference between the three hoses is not reflected in today’s regulation. Operators and owners either adopt internal standards or replace a hose significantly more frequently - and incur the high costs of hose replacements - adding to spiralling and often unbudgeted OPEX costs that are accepted as simply being part of the operation model and incur the consequently higher costs of hose replacements.
Now, add to the complication that each region has its specific set of standards for reeling operations. In the North Sea, for instance, rigorous requirements exist for the type of hoses used, with only submarine catenary configurations permitted due to severe weather conditions making it impractical to use floating hoses.
However, in some regions, such as Brazil, current standards stemming from compliance with local laws and OCIMF guidelines are based on a traditional dichotomy of a hose being either a 'single carcass' or 'double carcass' construction with unstable floating hoses being common. This contradiction is a binary standard that goes back decades, borne out of convenience in very different circumstances leading to a reluctant acceptance of increasing costs.
Meanwhile, there is a third way: the dual carcass. Yet, the dual carcass is often incorrectly categorised as a single carcass within OCIMF guidelines. However, the dual carcass combines flexibility, strength and durability. It is lighter and can occupy the same storage reel as a double carcass hose, if not smaller reels, saving valuable space. Unlike other hoses, a dual carcass can conduct oil transfers over longer distances without increasing weight, which impacts the ease of recovery. There is no doubt that the dual carcass hose provides a range of benefits that should be of interest to operators.
It is imperative that selecting a proven hose across its lifecycle for oil transfer is a crucial part of FPSO operations as opposed to something that ranks lowly in the FPSO’s final investment decision. The costs for failing to do so can be dramatic, reaching over 1.5 million euros throughout its lifecycle for unnecessary testing, replacements, and requalification.
The current focus on CAPEX versus OPEX carries the risk of prioritising low initial costs during the purchasing phase, which can lead to a preference for compatible products that can be mixed and matched. As a result, alternative options are often overlooked and not given a chance to be tried. This situation locks the industry into using lower-quality products, as the absence of regulation shifts the costs from the initial capital expenditure to ongoing operational expenses.
When operators choose to replace or test hoses more frequently, incurring multiple high costs for hose replacements throughout a project, it significantly impacts the overall costs of the project over its lifespan. This is particularly concerning as operators are seeking efficiencies due to the high prices of new FPSO units caused by a supply-demand mismatch, which has become the "new normal" in Brazil.
It's important to acknowledge that shifting the costs to OPEX increases the CO2 emissions within the supply chain, as it involves scrapping equipment and increases unnecessary maintenance operations.
Being locked into this process is not only highly expensive but also labour-intensive and wasteful. It encourages buyers to treat hoses as simple commodities. In fact, users that mix and match hoses from different suppliers, purchased at different times, could further exacerbate wear and tear on the hoses, increasing the need for maintenance despite the initial convenience it may provide.
Fail to prepare; prepare to fail
Regulators must recognise the existence of the latest and proven technology designed to deliver solutions required for the industry's unique circumstances today. One notable example is the offshore reeling operation, which highlights the efficiency of dual carcass such as long service life - vital to ensuring reliability and avoiding unnecessary maintenance.
In contrast to standard reeling hoses, dual carcass hoses, such as Trelleborg’s Reeline hose, use a nippleless hose design. This design feature means less stress is put on the hose, reducing stress corrosion and fatigue while reducing the possibility of a kink occurring in the hose – which would render a hose unusable, requiring immediate replacement.
Yet, these dual carcass hoses lack the recognition they deserve in the industry. This manifests in the need for more understanding between single, double, and dual carcass hoses. We cannot overlook the long-term consequences of prioritising cheaper upfront costs, which may result in the need for more frequent replacement of lower quality hoses.
There are those who are unaware of the differences between single, dual, and double carcasses. In fact, service life and maintenance intervals of reeling hoses vary quite dramatically. While most hoses have a service life between three and five years, the Reeline hose has a minimum maintenance-free service life of seven years or more for API 17k certified versions with use for subsea catenaries from leading oil & gas majors such as Equinor, Var Energy and BP.
A piece of puzzle
If the oil & gas industry is to do more with less and play an effective role in the energy transition, regulation should be the sword and shield for the sector. Regulators such as OCIMF should encourage the uptake of safer and proven products that reward long-term strategic thinking instead of focusing on upfront capex. However, regulation is letting the industry down. Oil transfer for reeling operations on FPSOs highlights an important gap between potential and actual performance perpetuated by standards that are no longer in pace with technology.
Rather than the industry developing its standards, the onus must be on regulators to create and implement the right regulations. Current standards lock operators and owners into using lower-quality products with the potential to see more risk of injury or leaks. We need regulation that goes beyond ‘nice to have’, rewarding progressive standards and allowing the sector to make the most of the technology available today.
Jonathan Petit is with Trelleborg