U.K. approves development of largest untapped oil field

By Steve Goldstein

The U.K. on Wednesday granted approval to what is called the country's largest untapped oil field, a move that sent shares of one of its producers surging and triggered criticism by environmental campaigners.

The North Sea Transition Authority granted development and production consent for the Rosebank field, which is northwest of Shetland. The field is going to be mostly held by Norway's Equinor, with Ithaca Energy having a 20% stake.

Shares in Ithaca Energy (UK:ITH) surged 9%. Equinor shares (NO:EQNR) (EQNR)rose 2% in Oslo.

"The announcement of Final Investment Decision (FID) for the Rosebank development offshore UK North Sea is an obvious positive for partners Equinor (80% operator) and Ithaca Energy (20%) and frankly for the UK North Sea offshore sector as a whole," said Mark Wilson, an analyst at Jefferies.

The move comes after 50 lawmakers last month urged drilling to be blocked there, saying 200 million metric tons of carbon dioxide could be produced, which they said is more than the combined annual emissions of 28 low-income countries.

Caroline Lucas, a Green Party lawmaker, on social media called the approval the greatest act of environmental vandalism of her lifetime.

The companies however say the Rosebank development has been optimized to reduce carbon emission, and the floating production storage and offloading vessel is designed to be electrification ready.

For Prime Minister Rishi Sunak, the moves comes shortly after he reversed previous environmental measures put in by Conservative governments, including a 5-year delay on the ban of selling gasoline- or diesel-fueled vehicles. While the Conservatives trail Labour in polling ahead of a general election expected next year, the party did manage to hold onto a seat vacated by former Prime Minister Boris Johnson, by focusing on the London plan to expand its ultra-low emission zone.

The companies say they plan to invest $3.8 billion in the development and will create 1,600 jobs at the height of the construction effort. In the first two phases, they estimate they can recover 300 million barrels of oil.

TechnipFMC (FTI) was awarded a $500 million contract for engineering, procurement, construction and installation, while Odjfell Drilling (NO:ODL) was awarded a $328 million rig contract.

-Steve Goldstein

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09-27-23 0809ET

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