BP is to open up two new Scottish fields in another sign there is still some life left in country’s oil industry.
The energy giant said it would invest around £420m in the new developments, one of which is in the North Sea and the other west of Shetland.
Its announcement came as the world oil price surged back to $70 a barrel after its historic drop of 2014.
Oil majors have been gradually increasing output and investment in recent months as prices recover.
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The North Sea is expected to generate £1bn in tax in 2018 - in a dramatic recovery of fortunes.
The latest announcements are for the Alligin field west of Shetland and Vorlich in the North Sea, which are capable of producing 30,000 barrels a day between them and are thought to contain some 50m barrels of recoverable oil, or its equivalent. They should come online in 2020.
They come on top of the even bigger Clair Ridge field west of Shetland, which is expected to start producing this year and contains some 640m barrels, enough to stay online till 2050.
Another West of Shetland field, Schiehallion, has also just got new investment to ensure its future.
Professor Alex Kemp of Aberdeen University said: “Clair Ridge and Schiehallion, west of Shetland, are are very very big. These other two are not so big but by North Sea standards they are really good news as we approach the decline stage.”
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BP said Alligin and Vorlich were satellite fields close to existing infrastructure, meaning they can be developed quickly. Alligin, a two-well development, will be “tied back” or connected to BP’s Glen Lyon vessel.
Vorlich, also a two-well development in the central North Sea, will be connected to the Ithaca Energy-operated FPF-1 facility.
BP confirmed engineering firm Subsea 7 will install the Alligin pipelines, with work expected to begin next year.
Meanwhile the company is “finalising its contracting strategy” for the Vorlich project.
Its North Sea Regional President, Ariel Flores, said: “Through our Alligin and Vorlich developments we are simplifying and accelerating the stages of delivery to improve project cycle time, reduce costs and, importantly, add new production to our North Sea portfolio.
“These projects follow on from a period of record investment by BP in the North Sea which helped deliver our Quad 204 project last year and will deliver our Clair Ridge project which is planned to start-up later in 2018.
“While not on the same scale as Quad 204 and Clair Ridge, Alligin and Vorlich will lead to significant production gains and further demonstrate BP’s commitment to the North Sea.”
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BP and Shell each hold 50 per cent stakes in Alligin, while BP has 66 per cent of Vorlich alongside Ithaca Energy’s 33 per cent share.
Oil & Gas UK last month said up to 16 North Sea projects worth a total £5bn could win approval this year indicating firms are more likely to invest in the area than they have been since the boom years ended in 2014.
The lobby reckoned total spending in the area could increase slightly in 2018 following three years of cuts. Some 56 per cent of firms told Oil & Gas UK they planned to increase headcount this year. Its chief executive Deirdre Michie last month said: “Our sector is leaner, more efficient and more optimistic than it has been in recent years and 2018 looks set to be a better year.”
Market experts, however, stressed that fears remain that a trade war between the US and China could still push down oil prices. UK oil output edged down one per cent last year, partly because the main Forties pipeline was closed for repair.
Production is predicted to rise some nine per cent overall in 2018 with gas output expected to be stable. Long-term concerns, however, have been sparked by a near halving of exploration drilling during the three hard years following the 2014 crash. Maintaining production at current exploration levels is said to be challenging.
Developing pools like Alligin and Vorlich are seen as key to keeping the Scottish industry alive as long as possible as major fields like Brent end.
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