Oil and gas exploration West of Shetland is set for a major surge in 2018, with the drive to find new hydrocarbon resources at its highest level since crude oil prices began falling, according to a new report by top consultancy Wood Mackenzie. And oil and gas output is is likely to hit an eight-year peak in the UK North Sea this year, fuelled by the huge Clair Ridge and Mariner developments off Shetland, which are set to start production.
As the price of Brent Crude hit almost $70 a barrel (up from a low of $30 two years ago, down from a high of $115 in summer 2014) The Wood Mackenzie report states that drilling activity - up to 14 wells in the UK sector during 2018 - could lead to further major developments. Production is forecast to reach 1.9million barrels per day, the highest level since 2010
Fuelling confidence is the news that energy giant Shell is to go ahead with redevelopment of the Penguins oil and gas field in the North Sea. A floating production, storage and offloading (FPSO) vessel will be built to handle production from the field, the first new manned installation for Shell in the northern North Sea in almost 30 years.
The redevelopment surfs increased confidence that the oil price will stay at a workable level. Shell says the field can be sustained on “a competitive go-forward break-even price below $40 per barrel.”
“Penguins demonstrates the importance of Shell’s North Sea assets to the company’s upstream portfolio,” said Andy Brown, Shell’s Upstream Director. “It is another example of how we are unlocking development opportunities, with lower costs, in support of Shell’s transformation into a world class investment case.”
The Penguins field currently processes oil and gas using four existing drill centres tied back to the Brent Charlie platform. The redevelopment of the field, required when Brent Charlie ceases production will see an additional eight wells drilled, which will be tied back to the new FPSO vessel. Natural gas will be exported through the tie-in of existing subsea facilities and additional pipeline infrastructure.