Giants Start Production from $4.5bn Gas Field East of Aberdeen
TOTAL has hailed the benefits of investing in the North Sea amid the downturn that followed the crude price plunge after starting production from a massive field east of Aberdeen.
The French oil giant said it had brought the Culzean field onstream on schedule and $500 million (£400m) under budget in a success that could help to stimulate interest in the North Sea.
Culzean is one of the biggest developments completed in recent years, at a cost of $4.5 billion.
“Once the field hits peak in the early 2020s, Culzean could account for more than 10 per cent of the UK’s gas production,” noted the Wood Mackenzie oil and gas consultancy.
The field start up provided a reward for Total’s decision to commit billions of dollars to North Sea exploration and development projects during the turmoil caused by the drop in the crude price from 2014.
This prompted many firms to slash spending on new projects.
However, Total bosses in Paris appeared to decide the resulting downturn created an opportunity to expand in an area they felt had long term appeal.
Total bought in to Culzean through the £5.8bn acquisition of Maersk Oil. This resulted in a big increase in the French group’s exposure to the North Sea.
“Culzean is a good example of our efforts to upgrade our portfolio in the North Sea over the last years, notably by bringing Total and Maersk Oil together,” said Arnaud Breuillac, President Exploration & Production at Total.
In January Total generated huge interest when it made a find estimated to contain 250m barrels oil equivalent with partners on the acreage acquired with Maersk Oil.
Coming after Total made a major gas discovery in West of Shetland in September, the success underlined the potential to make big finds in the mature North Sea.
With other firms cutting back on exploration in the UK North Sea drilling has fallen to record lows.
BP may feel that the Culzean start up provides some justification for its decision to shrink its North Sea portfolio in response to the crude price slump to focus on what it saw as the best prospects.
BP doubled its holding in Culzean in May 2016 through a deal with Japan’s JX Nippon, months after announcing plans to shed 600 jobs in the North Sea.
The head of BP’s North Sea business, Ariel Flores, said yesterday: “The ground-breaking Culzean development is the latest addition to BP’s resilient North Sea portfolio.”
The savings achieved on Culzean may partly reflect the fall in the cost of support services amid the downturn.
However, Total noted the efficiencies achieved as a result of using advanced technology.
Estimated to contain the equivalent of up to 300 million barrels of oil, Culzean was discovered by Maersk Oil in 2008.
Total operates the field with a 49.99% interest, with BP on 32%. JX Nippon has an 18.01% stake.
Glenn Morrall, of Wood Mackenzie’s North Sea upstream team, said: “Culzean is the third UK project to start production this year, but the biggest by a long way. It shows that there is still appetite for big developments in UK waters.”
He noted that operating the high pressure high temperature Culzean development would pose challenges but Total had experience of working with such assets in the North Sea.