BP invests $1bn in UK North Sea project
The investment will bring new life to the Eastern Trough Area Project in the central North Sea
BP has decided to invest $1bn in the Eastern Trough Area Project in the central North Sea, extending the life of the field and bringing welcome news from the struggling offshore.
“These are challenging times for the industry and we are having to make hard choices. Nonetheless, we remain committed to improving the competitiveness of the North Sea and to maximising economic recovery from our fields,” said the company’s North Sea president, Trevor Garlick, 5 August.
“BP’s primary areas of focus are the west of Shetland and central North Sea, where we are investing in both new developments such as Clair Ridge and Quad204, and in extending the life of our mature assets.
“In parallel, we are drilling new wells on Etap’s Machar and Marnock fields, replacing subsea infrastructure and deploying new technologies to help maximise the fields’ recovery.” He said the work being done would secure the future of the field until 2030 and beyond. The company did not say what the field’s life would have been without the work, or what the production would be.
The industry lobby-group Oil & Gas UK welcomed the news, in the context of the “harsh business environment.” However, it said in a statement 5 August, citing government data, that there were signs of production growth – “and that is something we’ll look to explore in further detail in our 2015 Economic Report next month.”
BP is also continuing to invest in its major oil pipeline, the Forties pipeline system (FPS). While it was happy to dispose of its stake in the Central Area Transmission System (CATS) gasline as part of its portfolio review, the FPS is a major third-party business for the major, which typically charges other producers between 80p ($1.25) and £1.20/barrel for shipping their oil at up to 85% send or pay.
It is therefore keeping on to it, although at a cost. For example, it has to limit the use of the refrigerant gas, Freon, in compliance with regulations from the European Commission, meaning spending on an alternative system. Over the next five years BP is expecting to spend about $1bn on FPS.
Provisional government figures suggest UK oil and gas production could be 2.5% higher in the first half of this year than it was in the same period last year – and if it finishes higher at the end of the year as a whole, that will be the first year of growing output for 15 years.
Provisional data for the first six months of 2015 show liquids production to be up around 3% and net gas production to be up around 2.5% this year, compared with the first six months of last year, with the caveat that the production rate might not be sustained over the rest of the maintenance season.
Production in the second quarter of the year looks particularly encouraging and early figures suggest that May saw the most oil and gas produced on the UKCS since March 2012. The large Golden Eagle field started producing in November 2014, but existing assets are also producing at better rates, OGUK said.