Bressay Oil Project Company

US oil giant Chevron has warned it may not be economically viable to proceed with a planned $10bn North Sea oil project, in a blow to hopes of a revival in the region.

Chevron said that the Rosebank project “does not currently offer an economic value proposition that justifies proceeding with an investment of this magnitude”, amid rising costs of drilling.

The project, which has been under consideration for a decade, had already been handed tax breaks from the government in the hopes it would make it viable. The disclosure that even these incentives may be insufficient is a blow to government hopes to stem steep declines in North Sea output.

“Rosebank has always been a challenging project. At present, the cost of doing business continues to rise,” a Chevron spokesman said.

The Rosebank field, 80 miles north-west of the Shetland Islands, lies in water depths of 3,600 feet and will require a floating production, storage and offloading vessel. It is thought 240m barrels of oil could be recovered from the field.

In July Chevron awarded £550m of contracts for work on Rosebank and another planned development.

Chevron said it was still working with partners, Austria’s OMV and Denmark’s Dong Energy, to try to improve the economics of the project, on which it had hoped to take a final investment next year. “The joint venture’s focus continues to be about making the right decisions that are not driven by schedules and timelines,” Chevron said.

The warning from Chevron follows Norway’s Statoil announcing it was delaying investment in the $6bn to $7bn Bressay oil field development.

In late 2018 a thirty-year adventure will begin 250 kilometres off Scotland’s north-east coast. That’s when the first oil tanker will leave the Mariner field, bound for the world’s energy markets. It’s been a long journey. Mariner is a sleeping giant, discovered more than thirty years ago. 

But because of the oil’s extremely high viscosity, previous operators were not able to extract it. In 2007, we acquired the operatorship, and with the experience gained from working with other heavy oil fields, we managed to solve the challenges. The Mariner project will be one of Statoil’s most innovative developments ever.

Discovered in 1981 on the East Shetland Platform, approximately 150 kilometres east of the Shetland Islands, the Mariner field is a daunting prospect for oil and gas producers. Mariner is a heavy oil field characterised by dense, viscous oil.

In December 2012, Statoil and its partners decided to take on the challenge and made the investment decision for the Mariner project, which entails a gross investment of more than GBP 4.5 billion. This was the largest capital commitment to the UK Continental Shelf (UKCS) in more than a decade.

The concept chosen includes a production, drilling and quarters (PDQ) platform based on a steel jacket, Mariner A, with a floating storage unit (FSU), Mariner B. Drilling will be carried out from the Mariner A drilling rig, with a jack-up rig assisting for the first 4 years.

The Mariner oil field consists of two shallow reservoir sections: the deeper, Maureen formation at 1492 meters and the shallower Heimdal reservoir at 1227 meters. The oil is heavy with API gravities of 14.2 and 12.1 and viscosities at reservoir conditions of 67 cP and 508 cP, respectively for Maureen and Heimdal.  

The development of the Mariner field will contribute more than 250 mmbbls reserves with average plateau production of around 55,000 barrels per day. The field will provide a long term cash-flow over 30 years.  Production is expected to commence in 2018.

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