Chevron cancels Rosebank FPSO newbuild

December 14, 2016

Chevron has canceled a US$1.8 billion floating production and storage offloading (FPSO) newbuild order with Hyundai Heavy Industries (HHI) that was destined for the supermajor’s Rosebank deepwater project in the North Sea.

Illustration of the FPSO, from Chevron UK.

The cancelation was made by Chevron subsidiary Chevron North Sea, and was revealed in a regulatory filing by the South Korean shipyard. 

Chevron originally ordered the newbuild in April 2013 under a $1.9 billion contract. However, in November that year the Rosebank partners said the project was going back to the drawing board after "shortcomings" were raised by OMV, which has since sold out its stake in the project. 

Under the original contract, the 99,750-tonne turret moored FPSO was scheduled to be delivered at the end of November 2016. 

The Rosebank FPSO was to be able to produce 100,000 bbl of oil and 190 MMcf/d of natural gas, and have the storage capacity for 1.05 MMbo. HHI was building the vessel to measure 29m in length, 57m in width, and 30m in depth, to withstand the harsh conditions of North Sea.

In August last year, HHI had also placed an order with Dtuch floating production and turret sytsems firm Bluewater for a turret for the vessel. Yet, two months later, that October, Fred Olsen Energy revealed that a construction contract for a newbuild semisubmersible rig which was originally destined for development drilling at Rosebank had been cancelled.

Rosebank is 130km northwest of the Shetland Islands, in Blocks 213/26 and 213/27, in 1110m water depth, close to Faroese waters. The field was discovered in 2004, and is considered one of the best and largest remaining undeveloped resources in the UK North Sea.

According to Chevron, final commitment to the Rosebank project depends on UK government approval and the project co-venturers approving the final investment decision. However, the super major says that Rosebank is currently progressing toward development, with optimization work continuing during 2016. 

According to Suncor Energy, which recently acquired Rosebank stake in October, the project is currently in the front-end engineering and design phase and has a design capacity of 100,000 bbl and 80 MMcf/d of natural gas.

In a statement, Chevron said: “Chevron North Sea can confirm that the agreement with HHI to provide the Rosebank FPSO vessel has been terminated with immediate effect. Chevron continues to value HHI as an important member of its world-wide supply chain and looks forward to exploring future business opportunities with HHI in accordance with business needs.

"The Rosebank project is continuing through FEED. Chevron is working closely with its joint venture participants to further improve project value and decrease execution risk as we progress through FEED. The Rosebank development is an important part of Chevron’s UK portfolio, where the company has been active for more than 50 years, and Chevron is committed to maximizing the economic recovery of its UK resources.”

The Rosebank project is operated by Chevron North Sea (40%). Partners include Suncor (30%), OMV (20%) and DONG E&P (10%).

Read more:

OMV to sell subsidiary for US$1 billion

Suncor completes Rosebank acquisition

Re-thinking Chevron's Rosebank

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