Chevron Cancels $1.9B Contract For Hyundai FPSO Unit

Chevron canceled its $1.88 billion contract with Hyundai Heavy Industries in December for construction of an FPSO unit for use in the U.K. North Sea, a decision blamed on persistently low global oil prices.

Delays in Chevron’s final investment decision mean that Hyundai did not start construction and will not suffer a loss on deal. The vessel was destined for Chevron’s Rosebank project.

The order for the vessel was placed in 2013 and delivery was slated for November 2016. Chevron made subsequent modifications to the vessel’s topside equipment design to reduce costs, but the need for a subsea export pipeline to carry gas to shore, along with the cost of drilling, field development and the FPSO unit, brought the total expected cost of Rosebank to about $10 billion.

Rosebank is about 175 km (109 miles) northwest of the Shetland Islands in depths of about 1,097 m (3,600 ft). The FPSO unit was designed to 100,000 bbl of oil and 5.3 MMcm/d (190 MMcf/d) of natural gas. It would have had storage capacity of 1.05 MMbbl of oil.

Chevron’s cancellation was preceded by the cancellation of a contract for a semisubmersible rig in October 2015 by driller Fred Olsen Energy for use in the Rosebank.

Shell, Teekay Given Until Feb. 1 To Repair FPSO Vessel

Norway’s Petroleum Safety Authority discovered numerous problems on Shell’s Petrojarl Knarr FPSO vessel during an audit.

Shell operates the Knarr Field, while Teekay owns and operates the FPSO unit. Shell took over operatorship of Knarr from BG Group Norway in February 2016.

The audit revealed nonconformities relating to:

  • Overpressure protection of gas export pipeline,
  • Follow-up of overpressure protection performance requirements,
  • Passive fire protection, and
  • Follow-up of flexible pipelines.

The audit also found that improvements could be made with labeling of equipment, follow-up and verification and the maintenance management.

The companies have until Feb. 1 to report on how they will address the issues.

Work On Third FPSO Unit Completed For Ghana

Ghana will be able to increase its oil production to more than 200,000 bbl/d following delivery in March of its third FPSO unit.

Jurong Shipyard in Singapore recently completed construction of the double-hulled vessel, which is 300 m (985 ft) long and has a storage capacity of 1.7 MMbbl. It also has a treatment capacity of 58,000 bbl/d for oil and condensates.

Eni-Ghana said first oil was expected from Offshore Cape Three Points in August 2017, but the company is trying to beat the expected date. Following arrival of the FPSO unit and subsequent mooring, the subsea installations will be able to produce about 45,000 bbl/d of oil.

—Joseph Markman