The Courier & Advertiser (Perth and Perthshire Edition)
New oil opportunities hope as Kraken field begins production
New field on time and under budget despite downturn in oil and gas sector
The head of the Oil and Gas Authority (OGA) is hoping first production from EnQuest’s Kraken field will spur further development in the North Sea.
Kraken, which lies east of Shetland, generated its first oil over the weekend and OGA chief executive Andy Samuel said he expected further heavy oil opportunities to open up as a result.
“As one of the most significant oil field projects in the UK Continental Shelf, successful production from Kraken is positive news for the whole basin,” Mr Samuel said.
“It has the potential to open up additional heavy oil opportunities in the northern North Sea, with other developments in the pipeline.
“It’s particularly pleasing to see a project delivered under budget, having clearly benefited from a strong partnership between operator and key service providers.”
EnQuest confirmed first oil flowed from its flagship Kraken development on Friday.
Development costs for the field totalled £2 billion and it is expected to be producing 50,000 barrels of oil per day by the end of the year.
Output is being handled through the Kraken floating production, storage and offloading unit.
While first oil has been achieved, the field development will not be fully complete for some months with drill centre three still to be commissioned.
Chief executive Amjad Bseisu said: “Kraken is a transformational project, made possible by EnQuest’s differential capabilities; the right mix of integrated technical capabilities, high levels of efficiency and cost discipline.
“With production from Kraken, EnQuest is moving from a period of heavy capital investment, to a focus on cash generation and deleveraging the balance sheet. A further update and additional analysis will be provided with EnQuest’s 2017 half-year results.”
During the initial ramp-up period, the 13 wells that have been drilled and completed to date – comprising seven producers and six injectors – are being brought on stream in a phased manner, to maximise long-term productivity and value.
“The achievement of producing first oil from Kraken on schedule and considerably under budget is a great testament to the capabilities of EnQuest,” the group’s head of major projects, Richard Hall, said.
“Our approach of rigorous planning, simplification of specifications and clarity in execution methodology has enabled us successfully to deliver this highly complex project.”
EnQuest saw the project through despite development partner First Oil Expro going into voluntary administration and carrying its own debt pile of £1.4bn.
EnQuest owns a majority 70.5% stake in Kraken, while the remaining 29.5% is held by Edinburgh-based Cairn Energy.
It (Kraken) has the potential to open up additional heavy oil opportunities in the northern North Sea, with other developments in the pipeline. ANDY SAMUEL