BP has underlined its commitment to the UK North Sea after getting the green light from the Oil and Gas Authority for a £200 million field development.
The regulator reckons the Vorlich development 140 miles east of Aberdeen could make an important contribution to its drive to maximise the recovery of the North Sea’s reserves.
Industry leaders said approval for Vorlich will bolster confidence among oil and gas firms in the North Sea as the area emerges from the slump that was triggered by the sharp fall in the crude price between 2014 and 2016.
Read more: North Sea oil and gas industry to generate £10bn surplus this year
Oil & Gas UK noted the potential to extend the life of the North Sea by a generation by making the most of relatively small fields such as Vorlich.
However, the trade body said the focus must be on developing more big projects to help ease the pressure on the North Sea supply chain.
BP slashed spending in the North Sea and shed around 600 jobs in the downturn. The company sold off a raft of North Sea assets it decided was non core.
The crude price rally since late 2016 combined with cost reductions has encouraged oil firms to start spending on new developments again.
BP announced plans to develop Vorlich and a find West of Shetland called Alligin in April. It aims to recover around 30 million barrels oil equivalent from Vorlich.
Read more: BP announces new North Sea developments as oil price rises
The head of the North Sea business, Ariel Flores, said yesterday Vorlich represented an exciting addition to the firm’s refreshed North Sea portfolio and further demonstrated BP’s commitment to the North Sea.
Mr Flores recognised Vorlich is not on the same scale as the giant projects BP has been developing West of Shetland, including Clair Ridge.
However, he noted the appeal of smaller fields that could be developed fairly quickly and cheaply by linking them with existing production facilities.
BP plans to tie Vorlich back to the floating production facility developed for Ithaca Energy’s Stella field.
“Without compromising safety, we want to simplify our processes, reduce costs and improve project cycle time to increase the competitiveness of our North Sea business,” said Mr Flores. “This is increasingly important as competition for global investment funds gets stiffer.”
BP expects to link the 20 million barrel Alligin field to the Glen Lyon production vessel
It was awarded exploration acreage close to existing finds including Vorlich in the latest UK licensing round.
The OGA said Vorlich will make an important contribution to its Maximising Economic Recovery UK priority as a valuable tieback utilising existing infrastructure and by maximising value from the Greater Stella Area hub.
Ithaca Energy started production from Stella in February last year, days after it agreed to a £1bn takeover bid from Israel’s Delek Group.
Read more: Israeli firm takes control of North Sea stalwart
Ithaca’s attempts to start production from Stella were held up by delays in work in Poland on the production vessel for the field.
The company bought in to Vorlich in January 2016 in a deal with Total involving minimal initial consideration.
It has a 34 per cent stake in the field. BP has a 66% interest.
The price of Brent crude has risen from less than $30 per barrel early in 2016 to above $80/bbl following moves by major exporters to support the market by curbing production . Brent sold for $115/bbl in summer 2014.
BP expects output from Vorlich to peak at 20,000 barrels oil equivalent per day, The field is expected to come onstream in 2020.
BP approved the Clair Ridge project and plans to revamp the Schiehallion field West of Shetland before the crude price plunge. The size of the fields combined with the benefits of modern technology should allow the firm to produce oil from them relatively cheaply on a per barrel basis.
BP is awaiting OGA approval for the Alligin development.
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 here