Sources said that the John Logan-scripted picture was gearing up to shoot in Los Angeles, but that changed when the budget rose to the vicinity of $160 million. U and Verbinski are looking at alternatives like shooting in London as a way to pare costs. The plotline takes place in the underwater city Rapture, where a pilot crash-lands near a secret entrance and becomes involved in a power struggle.

“We were asked by Universal to move the film outside the U.S. to take advantage of a tax credit,” Verbinski said. “We are evaluating whether this is something we want to do. In the meantime, the film is in a holding pattern.”

Verbinski and sources at the studio say they are determined to make the pic. Indeed, Verbinski (who has also been directing the Paramount animated film “Rango” with Johnny Depp) bowed out of directing a fourth installment of “Pirates of the Caribbean” so that he could direct “Bioshock” and produce under his Blind Wink banner.

Studio sources said that the budget simply became untenable, but U sources said this is no different than when the studio delayed the start of the untitled Robin Hood pic that Ridley Scott is now directing with Russell Crowe starring. U is making that picture for $130 million, a much lower budget that in its first incarnation. For a number of reasons that included the need for extra script work, that picture temporarily halted, a move which enabled Crowe to star in “State of Play” when Brad Pitt fell out.

All parties vow that “Bioshock” will not become another “Halo,” the live action adaptation of the Microsoft game that was going to be turned into a film by U and Fox until both studios got cold feet and cancelled the deal over budget fears.