Equinor Targets 2022 FID on Rosebank Project
One of the largest pre-sanction fields on the UK Continental Shelf, Rosebank, could significantly bolster the company’s UK portfolio. However, the field’s water depth and harsh environment may run development costs into the multibillion-dollar range.
Equinor confirmed a new timeline for the Rosebank project on the UK Continental Shelf (UKCS) in the North Sea. A final investment decision (FID) is now expected by May 2022, following the award of a 3-year extension for the Rosebank licenses by the UK Oil and Gas Authority.
“We are fully focused on bringing this much anticipated development to realization. We believe there is more value to capture in Rosebank, including the opportunity to reduce development cost,” Hedda Felin, Equinor’s senior vice president for UK and Ireland offshore, said in a statement.
Located approximately 80 miles northwest of the Shetland Islands, the Rosebank discovery has an estimated 300 million bbl of potentially recoverable reserves, making it one of the largest pre-FID projects in the UK. According to Wood Mackenzie, Rosebank would become the first UK field developed in a water depth of more than 3,280 ft and that water depth, combined with the harsh environment of the area, will make the field expensive to develop. Wood Mackenzie estimated last year that the capital cost of development may exceed $6 billion.
Equinor said it has established a Rosebank project team and that technical and strategic work and studies on the field are underway. The company purchased Chevron’s 40% operated interest in October 2018 (Suncor Energy and Siccar Point Energy also hold ownership stakes), completing the deal in January. Chevron had originally planned to develop the field as a subsea development tied back to a floating production, storage, and offloading vessel, with natural gas exported via pipeline.
Rosebank should help bolster Equinor’s UK offshore portfolio. The company also owns and operates the Mariner heavy-oil field east of the Shetlands. Startup on that field has been postponed several times from its initial 2017 scheduling; Reuters reported in April that the latest delay, caused by electrical problems on the platform, had pushed expected startup to summer 2019. Mariner is expected to produced 55,000 BOPD at its peak.
Chevron sold its Rosebank stake as part of an active reduction of its European portfolio in favor of unconventional assets. The month before, it sold its Danish upstream business to Total. Last week (30 May), it agreed to a $2-billion sale of its remaining North Sea assets in the UK to the Israel-based Delek Group. That sale is expected to close in September.