Rosebank Gets Green Light

Equinor and Ithaca Energy have announced in separate statements that they have taken the final investment decision to progress Phase 1 of the Rosebank development on the UK Continental Shelf.

The companies revealed that they will invest $3.8 billion in the project, which is located around 130 kilometers north-west of Shetland in approximately 1,100 meters of water depth. Total recoverable resources are estimated at around 300 million barrels of oil, with Phase 1 targeting an estimated 245 million barrels of oil, Equinor, which owns 80 percent of the development, and Ithaca, which owns 20 percent, outlined.

The field will be developed with subsea wells tied back to a redeployed Floating Production Storage and Offloading vessel, with first production expected in 2026-2027, the companies revealed. Oil will be transported to refineries by shuttle tankers, while gas will be exported through the West of Shetland Pipeline system to mainland Scotland, Equinor noted in its statement. Ithaca Energy highlighted that the Rosebank field will produce in excess of 21 MMSCF of natural gas every day, “the equivalent to the daily use of Aberdeen City”.

“Developing the Rosebank field will allow us to grow our position as a broad energy partner to the UK, while optimizing our oil and gas portfolio, and increasing energy supply in Europe,” Geir Tungesvik, Equinor’s Executive Vice President of Projects, Drilling, and Procurement, said in the company’s statement.

“Rosebank provides an opportunity to develop a field within the UK Continental Shelf which will bring significant benefits to Scotland and the wider UK,” Tungesvik added.

Philippe Mathieu, Equinor’s Executive Vice President for Exploration and Production International, said, “we are pleased to move forward with the Rosebank field together with Ithaca Energy”.

“This development further strengthens our international business, and we look forward to collaborating closely with our partner and suppliers to develop and operate Rosebank with the lowest possible carbon footprint while bringing the maximum value to society in the shape of UK investment, local jobs and energy security,” Mathieu added.

Arne Gürtner, Equinor’s Senior Vice President Upstream at Equinor in the UK, said, “we know that the world needs to transition to new, cleaner energy systems and our broad energy investments into the UK support this”.

“And while we do this there is going to be a continued need for oil and gas, which currently meets 76 percent of the UK’s energy needs. Our decision to progress the Rosebank development is the result of work and collaboration by our employees, partners, government, regulators, and other stakeholders to ensure that this development is able to help meet this ongoing need, with the lowest carbon footprint possible,” Gürtner added.

Gilad Myerson, Ithaca Energy’s Executive Chairman, said, “we are delighted to announce the decision to move forward with the Rosebank development alongside Equinor”.

“Rosebank stands as the largest undeveloped field in the UK, and with the receipt of development consent from the NSTA, we are now poised to embark on a journey that will not only provide critically important domestic energy but also ignite substantial economic impact,” Myerson added.

“The Rosebank project will create thousands of jobs and contribute significantly to securing the UK’s energy needs for many years to come,” Myerson continued.

Alan Bruce, Ithaca Energy’s Chief Executive Officer, said, “Ithaca Energy continues to deliver against its stated strategy and demonstrate its commitment to investing in the UK North Sea”.

“We look forward to expanding our working partnership with Equinor to deliver one of the lowest emission intensity assets in the UK. The Rosebank development represents a significant investment in the UK and Scotland, and we are delighted to be supporting our local supply chain,” he added.

NSTD, Jobs, Deals

Equinor highlighted in its statement that Rosebank is being developed in compliance with the North Sea Transition Deal (NSTD), which is an agreement between the UK government and the offshore industry.

“It acknowledges that whilst there is a continued, though over time reducing need for oil and gas, the remaining demand for oil and gas must be met with the lowest emissions possible,” Equinor noted.

“The FPSO has been designed to be electrification ready and Equinor is collaborating with government and industry to pursue a regional solution for power from shore to Rosebank and nearby fields to minimize carbon emissions from production”, Equinor added.

Equinor pointed out in its statement that, according to an independent socioeconomic report by Wood Mackenzie and Voar Energy, Rosebank is estimated to create $9.84 billion (GBP 8.1 billion) of total direct investment over the lifetime of the field.

“It is expected to support around 1,600 jobs during the height of the construction phase of the project, and it will continue to support approximately 450 UK-based jobs during the lifetime of the field,” Equinor said.

Several companies have already been awarded deals in relation to the project, Equinor outlined.

TechnipFMC has been awarded an integrated engineering, procurement, construction and installation contract for subsea production systems, umbilicals, risers, and flowlines, with an estimated value of around $500 million for the local content part, and Odfjell Drilling has been awarded a rig contract, with an estimated value of $328 million including integrated services, modifications, and options, Equinor noted.

Altera has also been awarded a bareboat charter and an operations and maintenance contract related to the Petrojarl Knarr FPSO, which is set to be deployed on the Rosebank field on a firm contract for nine years, and options up to a total of 25 years, Equinor stated.

NSTA Consent, Government Reaction

On September 27, the North Sea Transition Authority announced that it had granted development and production consent for the Rosebank field.

“The consent has been given by the oil and gas regulator to owners Equinor and Ithaca Energy, following the acceptance of the environmental statement,” the NSTA said in an organization statement.

“We have today approved the Rosebank Field Development Plan which allows the owners to proceed with their project,” an NSTA spokesperson said in the statement.

“The FDP is awarded in accordance with our published guidance and taking net zero considerations into account throughout the project’s lifecycle,” the spokesperson added.

A statement posted on the UK Department of Energy Security and Net Zero’s website said the government welcomed the decision by regulators to approve the new Rosebank development.

“While the government is scaling up homegrown clean energy sources such as offshore wind and nuclear, the UK still relies on oil and gas and this will continue to be the case over the coming decades,” the statement noted.

“As the government takes forward a pragmatic, proportionate and realistic response to the path to net zero, a key part of this will be maintaining our domestic oil and gas industry which underpins our energy security and boosts the UK economy,” it added.

“The oil and gas industry adds $20.65 billion (GBP 17 billion) annually to the economy, supports around 200,000 jobs, and will provide around $60.75 billion (GBP 50 billion) in tax revenue over the next five years, which can be used to support the shift to cleaner forms of energy,” the statement continued.

Extensive Scrutiny

The government statement noted that Rosebank has been subject to “extensive scrutiny by the regulators, including undergoing a detailed environmental impact assessment process and a period of public consultation before approval was granted”.

“New projects like Rosebank are expected to be significantly less emissions intensive than previous developments, as they are more efficient and are developed with measures to mitigate emissions,” the statement said.

“Even when we’ve reached net zero in 2050, the Climate Change Committee say that a quarter of our energy needs will come from oil and gas, but the choice is between it coming from hostile states rather than from the supplies we have here at home,” it added.

Commenting on Rosebank’s approval, UK Energy Security Secretary Claire Coutinho said, “we are investing on our world-leading renewable energy but, as the independent Climate Change Committee recognize, we will need oil and gas as part of that mix on the path to net zero and so it makes sense to use our own supplies from North Sea fields such as Rosebank”.

“The jobs and billions of pounds this is worth to our economy will enable us to have greater energy independence,” Coutinho added.

“We will continue to back the UK’s oil and gas industry to underpin our energy security, grow our economy and help us deliver the transition to cheaper, cleaner energy,” Coutinho continued.

Chancellor of the Exchequer Jeremy Hunt said, “we are accelerating renewables and nuclear power, but will still need oil and gas for decades to come – so let’s get more of what we need from within British waters”.

“Rosebank has been a huge untapped resource and now this investment will bring in billions of pounds into our economy to help secure our future energy supply,” he added.

“With this decision, we’re giving investors the confidence they need to invest here, produce here, export from here - and secure thousands of jobs for Britain’s workers,” he went on to state.

To contact the author, email andreas.exarheas@rigzone.com