The impact of US major Chevron’s recent decision to defer its high-profile Rosebank field development in the UK west of Shetland due to marginal economics has been acknowledged in several quarters, with one of those most directly impacted – subsea contractor Cameron – confirm it will only be working “on elements of its awarded scope” for the present time.

Cameron confirmed it had been advised of Chevron’s decision – which DI hears was largely driven by the field’s majority stakeholder OMV of Austria – to defer the Rosebank development while the operator works with its partners to improve the project economics. The contractor had only recently announced receipt by its OneSubsea joint venture with Schlumberger of an award from Chevron early in the third quarter for a US $540 million contract.

“At the request of Chevron, Cameron will continue to work on elements of its awarded scope and work with Chevron and its partners to improve the project economics. Total 2014 revenues from the Rosebank project for the Cameron scope is estimated at approximately $30 million,” said Cameron.

A separate contract valued at close to $2 billion for a newbuild FPSO (Floating Production, Storage and Offloading) vessel for Rosebank was awarded earlier this year to Hyundai Heavy Industries of South Korea. No announcement regarding that contract status has yet been made by either party. The 99,750-tonne turret-moored FPSO was scheduled to be handed over by the end of November 2016. It is specified to produce 100,000 b/d of oil and 190 MMcf/d of gas, with storage capacity for 1.05 MMbbl of oil.

A $1 billion development drilling contract had also been awarded to Norway’s Dolphin Drilling, which is building the rig Bolista Dolphin on the back of the 5-year deal.

Partner OMV, which expanded its stake to 50% when it bought out Statoil’s interests as part of a $2.65 billion deal, is still insisting the field remains an important part of their plans. But with the forecast expenditure levels put at up to $10 billion for the development, DI hears it quickly became apparent that the final investment decision was going to be delayed from its original planned schedule of 2014 to improve the field’s overall economics.

That will include a ground-up review of the front end engineering and design process. It is understood that an FPSO remains the favoured option, but there is a desire to firm up aspects such as the future program for enhancing the overall recoverable reserves through further prospect identification in the area, before going ahead. That will include prospects such as Rosebank South, which is not currently part of the initial development plan.

Rosebank is not the only field to have suffered delays in recent times due to escalating costs – Statoil’s Bressay development also in the UK sector, the Browse project offshore western Australia and BP’s Mad Dog Phase II project have all been stalled largely due to cost-inflation.

Chevron says it is continuing to work with its partners OMV and Dong on the project, but that the current economics posed problems.

“The Rosebank joint venture participants continue to work the front end engineering and design work and are focusing their efforts on developing an optimum development solution for Rosebank,” it said. “Rosebank represents a large, undeveloped resource base in the UKCS, requiring significant investment to unlock its potential. The Rosebank team is working diligently to ensure that this investment fully optimizes the value of Rosebank for all stakeholders. The Rosebank project is still in the front end engineering and design phase. The JV’s focus continues to be about making the right decisions that are not driven by schedules and timelines.

“At this time, a final investment decision is currently planned for 2014.”

Rosebank is located 130 km (80 miles) northwest of the Shetland Islands in 1,130 m (3,700 ft) of water. Discovered in 2004, Chevron holds a 40% stake in the field, with partner OMV holding 50% and Denmark’s Dong 10%. It is estimated to hold recoverable reserves of 240 MMbbl.