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Chevron to Spend $770 Million on Remote Projects Chevron to Spend $770 Million on Remote Projects
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ABERDEEN, Scotland — Chevron said on Tuesday that it would spend 500 million pounds, or nearly $770 million, on its planned Rosebank and Alder oil and gas development projects in British waters. ABERDEEN, Scotland — Chevron said on Tuesday that it would spend £500 million, or nearly $770 million, on its planned Rosebank and Alder oil and gas development projects in British waters.
Rosebank, an oil and natural gas field, is on what is becoming one of Europe’s key fossil-fuels frontier areas, the margins of the Atlantic Ocean west of the Shetland Islands off Scotland. Alder, holding gas, is in the central North Sea, which is also attracting major new investments. Northeast Scotland has evolved into the hub of Britain’s and in some respects Europe’s oil industry, with hundreds of suppliers of high-tech services and undersea gear. Rosebank, an oil and natural gas field, is on what is becoming one of Europe’s key fossil-fuels frontier areas, the margins of the Atlantic Ocean west of the Shetland Islands off Scotland. Alder, a gas field, is in the central North Sea, which is also attracting major new investments. northeast Scotland has evolved into the hub of Britain’s and in some respects Europe’s oil industry, with hundreds of suppliers of high-tech services and undersea gear.
Chevron, based in San Ramon, Calif., has been studying Rosebank since it discovered oil there in 2004. A final decision on whether to develop the field is not expected until next year. But Chevron and its partners, including Statoil of Norway, have already spent hundreds of millions of pounds on early drilling and design work, Stuart Klein, the project’s head, said in an interview in the company’s European headquarters in Aberdeen. Chevron, based in San Ramon, Calif., has been studying Rosebank since it discovered oil there in 2004. A final decision on whether to develop the field is not expected until next year. But Chevron and its partners, including Statoil of Norway, have already spent hundreds of millions of pounds on early drilling and design work, Stuart Klein, the project’s chief, said in an interview in the company’s European headquarters in Aberdeen.
The Chevron announcement comes as oil companies are ramping up spending in the North Sea and west of the Shetlands.The Chevron announcement comes as oil companies are ramping up spending in the North Sea and west of the Shetlands.
Lindsay Wexelstein, an analyst at the consultancy Wood Mackenzie in Edinburgh, estimates that the industry will spend $65 billion over the next five years, the most in real terms since the 1970s, including $18 billion west of the Shetlands. She said that Rosebank, if it proceeded, was likely to require the largest amount of capital during the coming period. Lindsay Wexelstein, an analyst at the consultancy Wood Mackenzie in Edinburgh, estimates that the industry will spend $65 billion over the next five years, the most in real terms since the 1970s, including $18 billion west of the Shetlands. She said that the Rosebank project, if it proceeded, was likely to require the largest amount of capital during the coming period.
Oil and Gas UK, a trade group, forecasts oil industry investment in Britain at 14 billion pounds this year, about triple what it was five years ago. As a result, production, which has fallen sharply in recent year to about 1.5 million barrels per day, is likely to begin rising, the group says. Oil and Gas UK, a trade group, forecasts oil industry investment in Britain at £14 billion this year, about triple what it was five years ago. As a result, production, which has fallen sharply in recent year to about 1.5 million barrels per day, is likely to begin rising, the group says.
Rosebank has required years of work because of the field’s tricky geology. The oil is contained in layers of sandstone sandwiched between volcanic basalt rock, which is difficult to penetrate with seismic imaging technology that the industry uses. Mr. Klein said that to obtain better images of the oil and gas, Chevron put 750 sensors on the sea bottom in 2010 and 2011 and then spent two years analyzing the resulting data. “There is less uncertainty than three years ago,” he said. Rosebank has required years of work because of the field’s tricky geology. The oil is contained in layers of sandstone sandwiched between volcanic basalt rock, which is difficult to penetrate with the seismic imaging technology that the industry uses. Mr. Klein said that to obtain better images of the oil and gas, Chevron put 750 sensors on the sea bottom in 2010 and 2011 and then spent two years analyzing the resulting data. “There is less uncertainty than three years ago,” he said.
Mr. Klein said that Rosebank would probably have 240 million barrels of recoverable oil and gas, making it a large field, though not a giant. Producing the oil will cost billions of dollars. Mr. Klein said that Rosebank would probably have 240 million barrels of recoverable oil and gas. Producing the oil will cost billions of dollars.
Chevron executives in Aberdeen said that recent changes in the British tax system, giving allowances of up to 3 billion pounds for deepwater projects in the area, had made the project viable in Chevron’s portfolio, assuming that oil fields earn $25 per barrel or more. Rosebank, which is in 1,100 meters, or 3,600 feet, of water and is being designed to survive waves of 30 meters, is believed to be the only project that would qualify for those allowances so far. Chevron executives in Aberdeen said that recent changes in the British tax system, giving allowances of up to £3 billion for deepwater projects in the area, had made the project viable in Chevron’s portfolio, assuming that the oil fields earn $25 per barrel or more. Rosebank, which is in 3,600 feet of water and is being designed to survive 100-foot waves, is believed to be the only project that would qualify for those tax allowances so far.
If Rosebank and the Alder gas field proceed, Chevron — which has 1,000 people in Aberdeen working in a variety of areas, including shale gas in Eastern Europe — will be on the leading edge of spending in the North Sea and its environs. Chevron is also a 19.6 percent nonoperating partner on Clair, Europe’s largest oil field, which is being gradually developed by a group led by BP. Clair is in the same area as Rosebank but in much shallower water. The three projects represent “the future of Chevron Europe,” Mr. Klein said.
The company is also a 19.6 percent nonoperating partner on Clair, Europe’s largest oil field, which is being gradually developed by a group led by BP. Clair is in the same area as Rosebank but in much shallower water. The three projects represent “the future of Chevron Europe,” Mr. Klein said.