PREMIER Oil’s enthusiasm for the giant Catcher development it brought into production south-east of Aberdeen recently reflects the success of a project that has provided a big boost for the North Sea oil and gas industry.

While many firms have slashed investment in the area amid the sharp fall in the crude price since 2014, Premier expects to make lots of money on the output from Catcher.

Crude is only selling for around $64 per barrel, compared with $115/bbl when Premier and its partner Cairn Energy decided in 2014 to proceed with Catcher.

Loading article content

But Premier chief executive Tony Durrant notes the costs of operating North Sea fields has fallen to around $20 per barrel from $35/bbl plus in recent years. Catcher is set to cost 30% less than expected, at $1.6 billion.

Premier has also reaped the rewards for its decision to buy a big portfolio of North Sea assets from E.ON for $120m in 2016, in time to benefit from the partial recovery in the crude price from a low of less than $30 in the first quarter of that year.

The mature assets in the portfolio have performed well.

It is encouraging that Premier seems keen to go ahead with the Tolmount project, on which it expects to generate good returns even at low gas prices.

However, the continued underperformance of Premier’s flagship Solan field West of Shetland is a source of concern.

Solan lies in a relatively under-explored area which is attracting attention from the majors, encouraging hopes there could be a bonanza in the future.

But Premier produced an average 5,900 barrels oil equivalent per day last year from Solan, which had been expected to be producing 20,000 boepd plus by the end of 2016.

Its experience shows the challenges involved working in an area where there is little production infrastructure in place compared with other parts of the North Sea