Chevron expedites Rosebank development plan

Chevron has accelerated the tendering process for its new FPSO at the Rosebank development West of Shetlands (WoS) ahead of a final investment decision (FID) anticipated in 2019.

Industry observers close to Rosebank reportedly said Chevron was likely to tender the bid documents during the second or third quarter of this year, rather than the fourth quarter as previously reported. 

Chevron is re-floating the tender for Rosebank’s FPSO after cancelling the original US$1.9 billion deal with Hyundai Heavy Industries (HHI) late last year. 

The US super-major is pursuing a scaled-back development reportedly to reduce the FPSO’s costs by US$100-150 million.

Chevron’s upstream chief, Jay Johnson, said the firm wanted to “stretch out” Rosebank’s production lifespan to squeeze more out of capital expenditure.

The super-major is believed to be aiming to award the FPSO contract by 2018, ahead of a launch tentatively scheduled for 2022. But the Rosebank licence must be renewed with UK authorities in mid-2019.

Rosebank is situated in UK Blocks 213/26 and 213/27 in 1,100 metres of water, some 80 miles (130 km) north-west of the Shetland Islands. 

Under the HHI blueprint, Rosebank’s FPSO would have handled 100,000 bpd of crude output, plus 80 mmcf (2.25 mcm) per day of gas. 

Rosebank must overcome harsh geological conditions, and must also bear the costs of a connection to export infrastructure in the under-explored WoS region.

The project was shelved in 2013 as cost estimates ballooned, but resurfaced in August 2015 with the award of an FPSO turret subcontract to Bluewater Energy Services. 

With the cancellation of HHI’s FPSO, it is unclear whether the deal with Bluewater will stand.

At present, Chevron owns a 40% in Rosebank alongside Suncor Energy (30%), Siccar Point Energy (20%) and Denmark’s DONG (10%).

OMV previously held 50% interest before withdrawing from Rosebank last year with divestments to Suncor and Siccar Point.

DONG will follow OMV through the exit later in 2017, once the Danish firm completes its withdrawal from oil and gas to concentrate on offshore wind investments.

Last week, DONG’s CFO, Marianne Wiinholt, was quoted by The Telegraph as saying the oil and gas divestments were “on track”, while declining to clarify whether negotiations had started.