TWO oil giants have confirmed plans to develop a massive North Sea field that ministers believe will increase UK production by 2% in a move that provides further proof of the buoyancy of the region.
Royal Dutch Shell and America's Exxon Mobil will proceed with the development of the giant Fram field 140 miles east of Aberdeen after getting the green light from the UK Government.
News of the proposed investment came on the day a Middle East-owned group announced it had made what may be a significant find north of Scotland.
Shell said the Fram development is one of the largest planned for the UK North Sea and among the biggest the company has completed in the area for more than a decade.
The partners hope to start producing 35,000 barrels oil equivalent from the field within three years providing what UK energy minister John Hayes said could be a significant boost for the country's production.
Shell expects the field to produce for 20 to 30 years. The project will be run from its Aberdeen upstream base.
"Fram itself will add around 2% to our oil and gas production – securing jobs, creating revenue and adding to our security of supply," said Mr Hayes.
He added: "The durability of oil production in the North Sea constantly confounds expectation."
Fram is the latest in a series of bumper investments in the North Sea sanctioned by giants who are looking to cash in on the strong demand for oil and gas amid rapid growth in countries such as China.
In February, Oil and Gas UK said firms would spend £31 billion on new fields and extending developments in the North Sea between 2012 and the end of 2015.
Advances in technology have transformed the economics of some fields that were previously considered uneconomic. Fram was discovered in 1969.
Glen Cayley, who heads Shell's North Sea business, said: "Fram is an example of a project that will slow the decline [of the North Sea]."
Shell and Exxon Mobil did not provide details of how much the Fram development will cost. Shell owns 32% of the relevant joint venture while Exxon Mobil has 68%.
However, Shell has shown its willingness to back multi-billion pound projects in UK waters. In October last year Shell and BP decided to proceed with the £4.5bn Clair Ridge development west of Shetland.
The latest investment provides another sign that the industry's biggest names will invest in the right projects in the North Sea, while selling off non core assets at the right price.
Mr Cayley said the decision to proceed was not affected by any of the changes made to the North Sea tax regime in recent years.
The Government has introduced a series of concessions after causing outrage in the March 2011 Budget by hiking North Sea taxes.
Separately, Abu Dhabi-owned TAQA Bratani said a well drilled from the North Cormorant platform in the Northern North Sea "encountered an oil accumulation that is expected to correspond to 10-30 million barrels of oil in place".
Shell does not provide details of its UK production levels.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article