Shell revives investment in North Sea with new vessel
● First investment in manned facility in almost 30 years
Oil giant shell is to develop its first new manned installation in the northern part of the North Sea for almost 30 years in a major boost for the sector.
The company said it has given the green light for the construction of a floating production, storage and offloading (FPSO) vessel which will begin drilling in the Penguins oil and gas field off Shetland.
Although the vessel will be built overseas, Shell estimates that between 300 and 400 jobs – mostly in Scotland – will support the construction programme with 70 jobs created once the vessel is operational.
Deirdre Michie, chief executive of Oil & Gas UK, hailed the announcement as a significant vote of confidence in the North Sea.
“A global leader like Shell making a commitment on this scale demonstrates the investment potential the UK Continental Shelf still holds,” she said.
“It also shows the importance of the efficiency improvements our industry has delivered which have helped make redevelopment projects like this commercially attractive.”
Theoilfield–150milesnortheast of the Shetland Islands – was discovered in 1974 before being developed in 2002 and is a joint venture between Shell and Exxonmobil.
The Penguins field currently processes oil and gas using four existing drill centres and its redevelopment will see an additional eight wells drilled. Describing the plan as an “attractive opportunity”, Shell said it is expected to have a peak production of about 45,000 barrels of oil per day.
The news comes amid a resurgence in oil prices which has seen Brent touch $70 a barrel although Shell said the project would have a breakeven point of less than $40 a barrel.
Fiona Legate, an analyst at Edinburgh-based consultancy Wood Mackenzie, said the announcement showed market confidence had returned and that up to 14 other investmentdecisionsonukprojects were in the pipeline this year.
Scottish energy minister Paul Wheelhouse said the news was a “hugely positive announcement” for both the Penguins field and the “future of North Sea oil”.
He said: “This significant investment by Shell and Exxonmobil is further evidence of rising confidence in the future of the region and it will offer a significant boost to communities across the north-east of Scotland, along with the wider Scottish economy.”
Us-based Fluor has won the engineering and construction contract for the vessel. The ferry industry is readying itself for growth on a wave of “sustained” customer numbers, Discover Ferries has found. The UK and Ireland industry body has highlighted more than £1 billion of investments announced for new ships, port and service facilities in the next four years. Among these are the UK’S first liquefied natural gas passenger ferry, MV Glen Sannox (pictured), which is set to be delivered to ferry operator Caledonian Macbrayne in winter 2018-19.