Equinor and Ithaca Energy’s announcement to go ahead with the Rosebank deepwater oil field project in the west of the Shetland Basin could lead to more fields being approved, according to a Wood Mackenzie (Woodmac) report , Woodmac noted in a statement posted on its site. .
“As the largest Final Investment Decision (FID) in 20 years, Rosebank will account for eight per cent of UK liquids production at its peak in 2027/28,” said Gail Anderson, director of research at Woodmac for in the North Sea, in the statement.
“Following this FID, there is a greater likelihood that other nearby fields, such as Cambo, will progress,” Anderson added.
Woodmac noted in the statement that the report states that despite the decision to develop Rosebank, the project still faces future tax risks, particularly around the UK government’s unexpected tax on energy companies: the Energy Profits Levy (EPL).
“A change of government at the next election could lead to the removal of the 29 per cent investment tax credit from the EPL,” Woodmac said in the statement.
“The UK’s well-earned reputation for fiscal disruption means Rosebank will face significant risks whoever governs the country next year,” Anderson said.
“Any future tightening of the EPL could make Rosebank’s economy marginal,” Anderson continued.
On 27 September, the North Sea Transitional Authority announced that it had granted development and production consent for the Rosebank field. A statement published on the UK’s Department of Energy Security and Net Zero website said the government welcomed the regulators’ decision to approve the new Rosebank development.
When Rigzone asked industry body Offshore Energies UK (OEUK) for a reaction to Rosebank’s approval, OEUK noted in a statement sent to Rigzone that it “welcomes the UK Government’s decision to approve the new Rosebank oil and gas field”.
“We need more projects like Rosebank if we are serious about the UK’s energy future,” OEUK said in the statement.
“At its peak, Rosebank could produce 69,000 barrels of oil (9,000 tonnes) a day, equivalent to eight per cent of total UK production between 2026 and 2030. It could also produce more than 21 MMSCF of natural gas each day, equivalent to the average daily use of the city of Aberdeen,” OEUK added.
While OEUK highlighted in the statement that the approval marks a major milestone in the UK’s energy reform, the industry body said that over its lifetime Rosebank will only meet UK demand for eight months, “which means more projects will be needed to manage dependence on imported oil and gas as UK production declines”.
In the statement, OEUK chief executive David Whitehouse described Rosebank’s approval as “good news for our jobs, our economy and our secure energy future”.
“By promoting homegrown production, we avoid more expensive and higher carbon imports, while making more reliable energy supplies in the UK, for the UK. We need more projects like Rosebank if we are serious about delivering an energy future of the United Kingdom,” he added.
“We have around 283 fields in the North Sea, but more than 180 of them will cease to produce in the next decade. If they are not replaced, we will be importing 80 per cent of the oil and gas the UK will need at a higher cost high for the consumer, our economy and ultimately the climate,” he continued.
“Our latest economic report found that $42.85 billion (GBP 35 billion) could be spent over the next decade on offshore oil and gas projects, but companies need renewed certainty to sign on. This announcement it’s a step in the right direction, but more needs to be done to secure the private investment that underpins the jobs for our homegrown energy future,” Whitehouse said.
Equinor and Ithaca Energy announced in separate statements this week that they had made the final investment decision to move forward with Phase 1 of the Rosebank development on the UK continental shelf.
The companies revealed they will invest $3.8 billion in the project, which is located about 130 kilometers northwest 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 owning 80 percent of the development and Ithaca owning 20 percent hundred, it is described.
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