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OTC 8768
Regulation of FPSO's in the Gulf of Mexico OCS

Chris C. Oynes, MMS, Regional Director, Gulf of Mexico OCS Region
Don Howard, MMS, Regional Supervisor for Field Operations

Copyright 1998, Offshore Technology Conference
This paper was prepared for presentation at the 1998 Offshore Technology Conference held
in Houston, Texas, 4-7 May 1998.
This paper was selected for presentation by the OTC Program Committee following review of
information contained in an abstract submitted by the author(s). Contents of the paper, as
presented, have not been reviewed by the Offshore Technology Conference and are subject to
correction by the author(s). The material, as presented, does not necessarily reflect any position
of the Offshore Technology Conference or its officers. Electronic reproduction, distribution, or
storage of any part of this paper for commercial purposes without the written consent of the

leasing in the GOM. Five recordbreaking or very large lease sales

Offshore Technology Conference is prohibited. Permission to reproduce in print is restricted to
an abstract of not more than 300 words; illustrations may not be copied. The abstract must
contain conspicuous acknowledgment of where and by whom the paper was presented.

With the advances being made in deepwater technology, the United
States Outer Continental Shelf (OCS) has embarked on a new era
of development potential. , a welcomed change after the slowdown during the lateThe Gulf of Mexico (GOM) has
reemerged as one of the principal offshore oil and gas basins in the
1980's and early 1990's. With this move into deepwater comes a
new set of challenges for both MMS and the oil and gas industry.
The MMS has worked hard to keep pace with industry initiatives,
technology developments, and the issues associated with deepwater
activities. One aspect that we recognize needs further evaluation
is floating production storage and offloading system (FPSO)
operations in the Gulf of Mexico.
The MMS continues to gather information and has participated
in discussions with the industry, both domestic and international,
on FPSO technology. If an operator proposes the use of an FPSO
to develop a Gulf of Mexico OCS discovery, MMS will evaluate
the proposal using its established environmental and technical
review procedures. A generic FPSO proposal or a specific FPSO-
based project may require the preparation of an environmental
impact statement (EIS) or similar document to identify and evaluate
fully the significance of potential impacts associated with such a
The purpose of this paper is to discuss the regulatory issues
associated with FPSO operations in the GOM from three general
perspectives: environmental, technical, and the conservation of
natural resources.
The past several years has been remarkable in terms of leasing
activity and operations, particularly for the deepwater portion of the
Gulf of Mexico OCS: record lease sales, drilling activities, and the
application of new technologies that have pushed away some of the
historical deepwater barriers. The MMS considers deepwater to
begin where industry has to use different technology to develop and
produce oil and gas from the OCS. In the Gulf of Mexico, this shift
occurs where industry stops using fixed platforms and begins using
other types of facilities to produce oil and gas, i.e., subsea facilities,
floating production facilities, tension leg platforms, etc. As a rule
of thumb, MMS adopted 1,000 feet as the marker for deepwater;
that terminology will be used throughout this paper.
Over the last three years, there has been a surge in deepwater
have been held. Another indicator of this surge in deepwater
leasing is the relatively high number of rigs operating in the GOM:
an average of nearly 200 rigs working and 150 rigs drilling since
late 1996. The continued growth of deepwater activity levels is
illustrated by the following statistics (April 1998):
- 29 rigs drilling in deepwater, the number steadily
increasing from just 10 rigs in April 1994; several are in
water greater than 4,000 feet, and one lies in more than 7,000
feet (Shell, MC 739 - 7,082 feet); 70 percent are mobile
- 24 deepwater fields are currently producing;
- 1997 estimated deepwater production: 25 percent of total
Gulf of Mexico OCS oil, 7 percent of total gas as compared
with 4.4 percent total oil and 0.6 percent total gas in 1990;
- approximately 17 percent of the total pipeline miles are
associated with deepwater projects.
There have been 1,190 exploratory and development wells
drilled to date in the deepwater areas of the GOM from both mobile
and platform rigs. Deepwater drilling has been concentrated in the
Green Canyon, Mississippi Canyon, Viosca KNoLinkList, and Garden
Banks areas; 90 percent of the deepwater wells have been drilled
in these areas. Increased activities in the western GOM are
expected beginning in 1998, particularly in the East Breaks,
Garden Banks, Keathley Canyon, and Alaminos Canyon areas. The
number of discoveries also continues to increase; many are remote
from existing infrastructure.
FPSO's in U.S. Waters
The MMS's experience with FPSO-type vessels is limited to a
single application in the Pacific Outer Continental Shelf Region
Exxon's offshore storage and treating (OS&T) vessel associated
with the Santa Ynez unit development offshore California. The
OS&T was located less than 10 miles offshore in the western end
of the Santa Barbara Channel. After the first discovery of oil and
gas in 1968, Exxon installed Platform Hondo (1976) in 850 feet of
water. Oil, gas, and water pipelines, each approximately 8,000 feet
in length, connected the platform to a single anchor leg mooring
(Salm) in 490 feet of water. The OS&T vessel was permanently

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Regulation of FPSO's in the Gulf of Mexico OCS
OTC 8768
connected to the Salm. Initial production from Hondo began in
of MMS's regulatory approach to FPSO's. Indeed, the regulatory
April 1981.
approach continues to evolve.
The OS&T was a converted 50,000 deadweight ton (dwt) oil
As with other deepwater initiatives, MMS has found itself
tanker (previously the
Esso Newcastle
) - 743 ft length, 102 ft
beam, and 50 ft draft. The OS&T's primary function was to serve
as a floating separation, power generation, and storage facility.
The vessel's six main cargo tanks could store 197,000 bbls of
treated crude oil, 36,000 bbls of "offspec" product, and 18,000
bbls of produced and treated water. These tanks were located in
the center of the vessel. Smaller tanks surrounded the cargo tanks.
A cargo heat exchanger was used to circulate and heat the cargo
tanks. Storage tanks were gas blanketed and vented to a vapor
recovery system where vapors were compressed into the fuel
system. Tank relief valves were piped to the vent system. A claus
sulfur recovery unit operated on the OS&T.
Each day the OS&T could treat up to 40,000 bbls of oil,
. As part of an overall deepwater strategy, MMS
25,000 bbls of water, and 40 million cubic feet of natural gas. It
is preparing a deepwater environmental assessment (EA) on
was also capable of producing eight long tons of sulfur per day. Its
operations in the deepwater areas of the Gulf of Mexico OCS and
cargo transfer rate was 600,000 bbls per day. The oil was
from associated support activities and infrastructure. The MMS is
offloaded by the
Exxon Jamestown
(240,000-bbl capacity) to Los
Angeles area refineries; approximately 35 trips per year were
FPSO Discussions
A workshop cosponsored by MMS and the industry consortium
completed in July 1998.
Deepstar was held in April 1997, with the purpose of educating the
As no formal proposal for an FPSO-based development
participants about the floating production technology in operation,
project has been submitted to the MMS, no decision has yet been
and the proposal for use in the GOM. The workshop was also
made on what level of National Environmental Policy Act (NEPA)


designed to help identify the issues and concerns with FPSO
evaluation and documentation would be needed. It is likely that an
operations as they relate to the Gulf of Mexico OCS. An equally
EIS would be required for the first FPSO-based development
important objective for MMS was to identify the sources of
project on the Gulf of Mexico OCS. The decision on whether to
information available to help with the environmental reviews that
prepare an EIS is based on several considerations, including the
are mandated by law for OCS activities. Presentations were given
potential for environmental impacts, the degree of uncertainty
by industry experts, contractors, offloading/transport operators,
about the significance of potential impacts, and the level of concern
MMS, and the U.S. Coast Guard (USCG). Discussions focused on
or controversy associated with a proposed action. There are
the advantages and disadvantages of FPSO's, technology and scope
specific environmental issues and potential impacts related to
of operations projected for the Gulf of Mexico, MMS requirements
FPSO's, as well as some broader programmatic concerns, that will
for use of FPSO's, USCG requirements for use of FPSO's,
likely trigger an EIS.
lightering and shuttle tanker operations, and the risks and hazards
If an EIS is prepared by the MMS, the process would likely
associated with tanker-supported FPSO's. Technical challenges
take about 2 years. Various industry representatives have
for FPSO operations were described, along with some of the efforts
expressed concern about the length of time involved if an EIS is
underway to meet those challenges. The MMS role in the approval
required for a development project that uses an FPSO. According
of offshore oil and gas operations is quite broad, leading to MMS
to some, such a delay negates the advantages of using the FPSO,
involvement in all aspects of FPSO's.
specifically the reduction of the cycle time associated with a
Regulatory Issues
production). Regarding those concerns, the MMS believes that it
Since the time of the workshop, MMS has met with representatives
of Gulf of Mexico OCS operating companies, FPSO companies,
and tankering companies to gather technical information and
discuss risks and concerns related to FPSO's in the Gulf of
Mexico. In these meetings, MMS has explained that the burden of
proof for demonstrating that FPSO operations can be performed in
the Gulf of Mexico OCS in a safe and pollution-free manner
resides with the operator. Since this would represent the first time
OCS oil and gas production would be transported by tanker in the
Gulf of Mexico, MMS will need to be assured that the use of such
technology does not increase the general risk to the environment
over other alternatives. The observations made by the MMS
officials in this paper in no way definitively enumerate all aspects
needing to adapt some areas of the regulatory program and
responsibilities to address the different issues and concerns related
to FPSO's. The MMS has had a long-term and productive
relationship with Deepstar, interacting primarily with their
Regulatory Issues Committee to address issues before they become
major concerns, and to share information about emerging
technology. The open dialogue with Deepstar has been very
beneficial making the concerns and needs of both MMS and
industry mutually understood. Building on the success with
Deepstar, similar lines of communication have been established
with other segments of the offshore industry.
using the EA process as a planning and management tool to ensure
appropriate environmental review of deepwater operations.
Objectives of the EA are to identify and evaluate the significance
of potential impacts from operations in deepwater and to develop
appropriate mitigation measures if needed. The EA will be
deepwater development project (time from discovery to first
may be wise for industry to begin the preparation of an
environmental document. There are two options for initiating the
environmental document. One option would be the formal
submission of a site-specific, FPSO-based development operations
coordination document (DOCD).
A second option would be the preparation by industry of a
generic environmental document by a third-party contractor. In
such a case, an operator or industry group would fund the
preparation of the document and supply the technical information,
and a typical FPSO operation expected in the GOM would be
analyzed by the contractor. This environmental document would
not formally be an EIS. (By law, MMS must remain responsible
for the overall scope and findings of the EIS.) The advantages to

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OTC 8768
Chris C. Oynes and Don Howard
"contracting out" such a document are that the process could be
of the system and associated operations plan prior to major
initiated sooner and the process could be compressed into a shorter
commitments and expenditures for hardware. It should be
time (14-18 months). Any decision regarding the eventual use of
submitted for approval after the lessee has substantially completed
an FPSO still resides with the MMS; the environmental document
system design and prior to commencing procurement and
would provide the environmental information necessary for making
an informed decision. In addition, subsequent environmental
3)The final part updates information previously submitted in
review of DOCD's for FPSO's could tier off this and would not as
the preliminary or conceptual parts. This part shall be submitted
likely require a full blown EIS. The NEPA evaluations of
for approval within 90 days following initial production.
subsequent FPSO-based projects would most likely be
The 3-part DWOP is intended to coincide with the operator's
environmental assessments.
knowledge regarding the project. The DWOP is also intended to
As with all projects on the OCS, operators will be
expected to conserve resources. The primary issues MMS sees
with FPSO operations are flaring of associated gas and the early
abandonment of producing zones. Gas disposition will be
reviewed closely by MMS. Operators can expect that MMS will
not allow extended flaring for any project, including an FPSO-
based project. The MMS will consider and has approved some
limited volumes and durations for flaring to allow for well testing,
well unloading, and other infrequent, short-term efforts. Flaring oil
field gas for up to 1 year may be permitted for economic reasons,
with justification, if there is an approved plan of action to
eliminate the flare. One example of such a situation might involve
early production where a pipeline will ultimately be installed to
transport the gas to market. Any economic analysis should include
how the operator intends to address the gas disposition. The MMS
is aware of gas reinjection as a disposition strategy. Reinjection
would require further investigation, particularly regarding the
potential for subsequent recovery once gas has been reinjected.
Such proposals would likely be addressed on a case-by-case basis.
The MMS has established procedures to look at the
conservation aspects of deepwater developments, both at the
development (pre-production) stage and prior to zone
abandonment. A Notice to Lessees and Operators (NTL)


describes the conservation review process and what information is
required for GOM deepwater or subsea development projects.
The MMS initiated a Deepwater Operations Plan (DWOP)
agencies regarding the delineation of responsibilities for all floating
requirement in 1996 to address the growing complexities and
production systems, of which FPSO's is a subset. The USCG
issues evolving with deepwater development projects. Through
expertise in marine transportation and facilities will be valuable to
MMS's active involvement with the Deepstar Regulatory Issues
the ensuing discussions. There have been concerns expressed
Committee, MMS and industry participants were able to evolve
regarding the need for a double hull for the FPSO, and the
the DWOP concept jointly.
applicability of OPA regulations to FPSO operations. The USCG
A DWOP is required for all deepwater development projects
has indicated that double hulls would likely be required for a Gulf
and all projects utilizing subsea production technology. Projects
of Mexico FPSO.
that use conventional fixed-leg platforms are exempt from the
The topic of FPSO classification by independent groups
DWOP requirements. The DWOP addresses technology, safety
(classification societies) is also of interest to the MMS. The
systems, inspection, testing and maintenance practices, alternative
integration of offshore production facility design and tanker design
compliance, and other subject areas. The DWOP is a proprietary
philosophies is understood to be a challenge, and has resulted in
document submitted to MMS in three parts: conceptual,
some criticism by operators about FPSO system quality and project
preliminary, and final. Each part is described further as follows:
delays. It is unclear to MMS if the concerns raised to date were
1) The conceptual part addresses the general design basis and
directed at specific projects (and shipyards), or if they are intended
philosophy used to develop the field. This part provides an early
for the entire classification process. The MMS must be assured
opportunity for MMS and the lessee to agree on a plan of
that the verification and classification process for FPSO operations
development prior to major expenditures for engineering design.
is credible before an FPSO can operate in the Gulf of Mexico
It should be submitted for approval after the operator has identified
the concept(s) for development and prior to commencing with
The FPSO operations deviate from historical activities in the
engineering design.
GOM by the number and variety of systems that interface with the
2) The preliminary part provides an opportunity for approval
production system (e.g., offtake to shuttle tankers interfacing with
reduce the overall project planning and scheduling risk of the
deepwater development project by eliminating the uncertainties
associated with approving new technologies and alternative
compliance measures. The DWOP approach has reduced the need
for MMS to revise regulations constantly to keep pace with rapidly
evolving deepwater technology.
A continuing dialogue with Deepstar and others has resulted
in the revision of the first set of DWOP guidelines. Following an
extensive review by MMS, a new NTL is planned to be issued in
May 1998 to implement the revised DWOP guideline. The
significant changes made include:
- improved readability;
- information requirements for floating production systems
and nonconventional fixed facilities;
- increased flexibility by focusing DWOP information on a
component basis; allowing unique technologies (new to the
GOM) to be addressed without revising the guideline;
- requiring a conceptual part for every project that requires
a DWOP; and
- waiving the preliminary part for certain shallow-water
subsea developments.
The USCG role in regulating FPSO operations will be a key
issue to delineate as we move forward with possible developments.
There are jurisdictional overlaps between MMS and the USCG that
we believe can be identified and coordinated to avoid duplication
of effort. The Memorandum of Understanding between MMS and
the USCG has integrated some of the initial thoughts of the two

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Regulation of FPSO's in the Gulf of Mexico OCS
OTC 8768
production processing). The United Kingdon (UK) Health and
systems, their capabilities, operability, and experiences in other
Safety Executive (HSE) recently published a report titled "Close
areas of the world. The MMS continues to investigate the
Proximity Study," which assesses the "risk of collision during close
international efforts that are focusing on the interfaces between the
proximity operations involving shuttle tankers at offshore
production and nonproduction processes.
locations." All aspects of the FPSO and shuttle tanker are
No one has proposed an FPSO as a development strategy for


addressed on a component basis (e.g., propulsion, surface export
the GOM to date, although several operators have indicated that
system, controls). The report includes a secondary objective of
they are close to making a formal submittal. Once again, MMS has
identifying mitigating measures to minimize the risks associated
the environmental and regulatory regime in place to address such
with collision. The report concludes that the "greatest single
a proposal, and it will be the operator's responsibility to
marine risk is that of collision between the Floating Storage Unit
demonstrate to MMS that the FPSO can operate in the GOM in a
or FPSO and the offtake tanker."
safe and pollution-free manner.
The MMS is interested in how the various aspects of an
FPSO-based project interrelate (i.e., production, processing,
storage, offloading), and how stresses such as weather, process
upsets, delays, etc., affect safety of the operation. Included in the
HSE document are risk management, joint/simultaneous
operations, delineation of responsibilities, emergency systems and
procedures (includes risk reduction measures for shuttle tanker
operations when in close proximity to the FPSO), communications,
and interface operations and equipment. Before MMS can approve
a project, the operator must be able to demonstrate to MMS that
there are sufficient safeguards built into the production system to
prevent the occurrence of significant incidents that impact safety or
environmental concerns. Clearly defined operating procedures that
describe the division of responsibility and accountability will be a
factor in the acceptability of an FPSO development.
The MMS is aware of international efforts underway to
develop guidelines for safe offtake from FPSO's, FSO's, and
single-point mooring buoys, and for the associated shuttle tanker
operations. We encourage operators considering the FPSO option
for field development in the GOM to evaluate the international
efforts underway, and integrate the results of these efforts as
appropriate into the project planning and implementation.
A common theme for many deepwater development projects
is the operator's desire to fast-track the process. In some instances,
construction begins in parallel with design work, and time frames
are compressed in an effort to reduce the cycle time, i.e., move up
the date of first oil. The MMS is concerned about the move toward
fast-track development, particularly in relation to the quality and
safety of the systems developed for production on the OCS.
Operators need to understand that there are environmental reviews
and regulatory requirements that cannot be compromised as part of
the fast-tracking effort. An early dialogue, as provided in the
DWOP process, will continue to be a necessity for the
sophisticated deepwater developments.
The MMS is committed to ensuring the safe and pollution-free
exploration, development and production of the offshore mineral
resources. As interest and activity continue to grow, especially in
the deepwater areas of the GOM, it will become increasingly
important for the industry and MMS to maintain an open dialogue
about technological advances, regulatory needs and concerns, and
operational safety. The MMS has been working to keep pace with
advances in technology and with the issues that most affect safe and
pollution-free exploration and development offshore. The issues
involved with FPSO operations in the Gulf of Mexico OCS have
been discussed jointly with operators, contractors, and others over
the past two years. We have a better understanding of the FPSO

"Floating Production, Storage, and Offloading Systems in the Gulf
of Mexico - Proceedings of a Workshop
Houston, April 16, 1997
U.S. Minerals Management Service, OCS Report MMS 98-0019.
2. MMS Notice to Lessees and Operators (NTL) No. 96-6N,
"Conservation Information," October 1, 1996.
3. U.K. Health and Safety Executive, "Close Proximity Study,"
Offshore Technology Report OTO 97 055.