Maersk’s Tyra field redevelopment secures Danish gas supply
The country’s main gas-producing field is to get a costly makeover, extending the life of North Sea developments
Approval of the $3.33bn redevelopment of the ageing Tyra field, operated by Maersk Oil offshore Denmark, is one more indication that the countries bordering the North Sea aren't going to give up on flagship assets that have served them well in the past without a fight, and a belief that European gas demand will support them over the coming decades.
Tyra provides around 90% of Denmark's domestic gas supply so the extensive redevelopment required to keep it in working order is deemed worth the effort to ensure Denmark's energy security at a time when European gas demand is starting to pick up. The redevelopment has attracted a raft of financial incentives, recently approved by the Danish parliament, to get the project over the line.
Maersk Oil, which is in the process of being taken over by France's Total, operates the field on behalf of the Danish Underground Consortium, a partnership between AP Moller-Maersk (31.2%), Shell (36.8%), Nordsøfonden (20%) and Chevron (12%). Lying some 225km west of Esbjerg, the redeveloped field is expected to produce around 60,000 barrels of oil equivalent a day at its peak. Roughly two thirds will be gas, the remainder oil. Tyra is estimated to still hold more than 200m boe of recoverable oil and gas.
The field was discovered as far back as 1968 with production starting in 1984. Since then the chalk reservoir has subsided, causing the platforms to sink by 5 metres over three decades, bringing them closer to the sea.
Under the redevelopment, the two existing gas processing and accommodation platforms on Tyra East and Tyra West will be replaced by a single new processing platform and a single new accommodation platform. The four wellhead platforms and two riser platforms will have their jackets extended by 10 metres and the current topsides will be replaced by new ones. This will require the field to be shut in from November 2019, with production expected to restart in July 2022. The redeveloped Tyra is then expected to have a 25-year lifespan.
Some $2.7bn of the total cost will finance the new infrastructure, with the remaining $0.63m going towards decommissioning the infrastructure that is being removed.
While the project may carry a hefty bill, the benefits are expected to reach beyond the hydrocarbons produced. Denmark will benefit from the jobs created and the tax revenues, while the infrastructure, both onshore and offshore, should also mean any future gas finds in Danish waters can be developed more cheaply than would have been the case if Tyra had been retired. Extending the life of the development also defers the costs of decommissioning the whole field.
"The full reconstruction of Tyra is vital to the development of the Danish North Sea oil and gas sector," the country's energy minister, Lars Christian Lilleholt, said. "Not just to Maersk Oil-but to many companies relying on Tyra as a central gas hub."
For Maersk Oil—and Total—it adds another regional hub for gas development to go with Maersk's Culzean development in the UK North Sea, which is expected to come onstream in 2019 and produce a peak of 60,000-90,000 boe/d. Total already operates the giant Laggan-Tomore gas project in West of Shetland. Maersk also has an 8.44% stake in Norway's offshore Johan Sverdrup project, operated by Statoil, based on one of the largest North Sea oil finds of recent years, with estimated resources of around 2bn-3bn boe.
Total's $7.45bn acquisition of Maersk Oil, which was announced in August, is scheduled to be competed in the first quarter 2018.