North Sea boost as first oil flows from huge Kraken field
● Daily output from find east of Shetland is expected to hit 50,000 barrels by 2019
Production of the first oil from one of the largest North Sea fields to come on stream in a decade has been hailed as a major boost for the beleaguered offshore industry.
The Kraken project, around 80 miles east of Shetland, contains an estimated 140 million barrels of oil and industry experts believe it could account for around 5 per cent ofoverallukproductionwhen it hits peak output in 2019.
Operator Enquest, which owns 70.5 per cent of the £4 billion Kraken development with the remainder owned by Edinburgh-based Cairn Energy, said first oil had been achieved “on schedule and under budget”.
UK business and energy secretary Greg Clark described the news as a “landmark for Enquest and the UK oil and gas sector”
“This has been made possible through significant UK government support to encourage investments of this type in the North Sea, supporting thousands of highlyskilled jobs.
“We’ll continue to build on this support for the oil and gas sector as it looks to seize the significant opportunities that lie ahead.”
Edinburgh-based energy consultancy Wood Mackenzie estimates production will average 20,000 barrels per day this year which would account for 15 per cent of overall yearon-year production growth in the UK in 2017.
It expects Kraken production to peak at almost 50,000 barrels per day in 2019, some 4.5 per cent of the overall UK production forecast for that year.
Wood Mackenzie research analyst Kevin Swann said that first oil was a welcome boost for the industry.
“Although other heavy oil fields have produced in the UK, this is the first of a batch of projects that were discovered some time ago but were previously deemed too challenging technically to develop,” he said.
Deirdre Michie, chief executive of trade body Oil & Gas UK, said that Enquest had taken a range of “innovative and efficient steps” to bring Kraken on stream while keeping costs down.
“Effective partnership working with the supply chain has also played an important part,” she added. “First oil from Kraken is good for Enquest and good for our industry. It demonstrates once again what the North Sea can still deliver with the right approach and investment.”
Scottish Secretary David Mundell said the milestone will help secure jobs in the North Sea oil and gas industry “which is very much still open for business”.
Although analysts at Barclays said first oil was “clearly a positive milestone for both Enquest and Cairn”, they also cautioned that “past experience tells us development risks remain through the production ramp-up phase”.
Other recent discoveries in the North Sea include Hurricane Energy’s Lancaster field west of Shetland, thought to contain some 523 million barrels of recoverable oil.