ROYAL Dutch Shell has given the green light to its seventh North Sea development project of the year amid fresh signs interest in the area is building.
The oil and gas giant has approved plans to revamp the Shearwater platform 140 miles east of Aberdeen with partners in a move that signals confidence in the long term potential of the North Sea.
The upgrade will allow Shearwater to process valuable wet gas (condensate) from fields in the area. Shell sees the potential to develop finds that could be linked to the platform.
The head of Shell’s UK exploration and production business Steve Phimister said: “This is part of our strategy to grow our gas production from around the Shearwater platform and it underscores Shell’s commitment to maximising the economic recovery of oil and gas from the North Sea.”
Shell did not give financial details of the project.
It looks likely that the project will involve hefty investment, albeit not on the scale of some of those approved earlier this year.
These include a plan to redevelop the giant Penguins field off Shetland which was unveiled in January.
The projects announced this year suggest Shell has shifted its focus to growing its North Sea business after a period of retrenchment. It sold off North Sea assets, shed more than 1,000 jobs in the area and closed a finance centre in Glasgow which employed 380 people in response to the crude price plunge from summer 2014.
The partial recovery in the crude price since major exporters agreed late in 2016 to curb production, combined with cost cuts, has encouraged firms to invest in the North Sea.
On Friday Opec members and Russia agreed to further output cuts to help shore up the crude price, which had fallen 30% since October amid booming production in the USA.
Brent crude sold for around $61 per barrel yesterday, against $85/bbl in October and $115/bbl in June 2014.
Independents provided fresh evidence that they see good prospects in the North Sea, where some have won backing from financiers for ambitious growth plans.
Verus Petroleum underlined its appetite for more acquisitions on the United Kingdom Continental Shelf after securing an additional $350m (£275m) firepower.
Verus has completed three deals worth more than £350m in total in recent months, which chief executive Alan Curran said showed its resolve to become one of the leading independents in the basin.
He reckons the support provided by Norwegian private equity firm HiTecVision provides Verus with a strong capital base to support further expansion. It has secured a $500m reserve based facility from lenders including RBS, up from $150m.
Azinor Catalyst has generated strong interest in the exploration programme it plans to complete next year, which is targeting prospects thought to contain around 500 million barrels.
The company said it has received a Letter of Intent for the acquisition of material interests in three wells planned for 2019.
Private equity-backed Azinor made a find thought to contain up to 50 million barrels in November with the Agar Plantain well off Shetland.
It drilled the well after prominent Scots independents Cairn Energy and Faroe Petroleum bought into the acreage.
Shell’s partners in Shearwater are BP and America’s ExxonMobil. It has agreed other North Sea projects with the firms this year.
The upgrade will involve laying a 23 mile pipeline to help take condensate to the St Fergus terminal in Aberdeenshire. Shearwater will handle output from the Fram and Arran developments approved this year. It could process output from the Jackdaw and Pierce fields Shell is considering developing.
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