Energy firm BG Group has cut its production forecast for the year by about 4%, partly because of the shutdown at Total’s Elgin platform in the North Sea.
Operations on the Elgin-Franklin field have been suspended since March after gas started spewing out of a well on the platform 150 miles off Aberdeen.
The leak was plugged in May, but BG chief executive Sir Frank Chapman said yesterday he did not expect full production to resume until next year. BG has a 14.11% stake in the Elgin-Franklin field, and had anticipated taking 6.4million barrels of oil equivalent (boe) from the development this year.
The oil firm said Conoco-Phillips’ decision to push back start-up of its Jasmine field, in which BG has a 30.5% interest, had also hit output expectations. Despite an increase in production volumes elsewhere, BG said the two issues in the North Sea and reducing drilling work in the US had led to it cutting its production forecast to 720,000 boe per day, compared with 750,000 boe previously.
Sir Frank said: “Although upstream production continued to grow this year, the long-term shutdown at the Elgin-Franklin field, the deferral of the Jasmine field start up to 2013, and the scaling back of drilling operations in the US are expected in aggregate to reduce the year-end production rate by some 50,000 boe per day.
“Opportunities elsewhere in the portfolio are expected to offset some 40% of this impact. The net result is that we expect production at year-end to be some 720,000 boe per day.”
BG downgraded its forecast as it revealed operating profits were £350.5million in the second quarter, down from £1.4billion in the same period last year.
Pre-tax profits were £388million, down from £1.4billion. Turnover went up to £3.7billion, from £3.4billion previously.
Mark Ireland, investment manager with Brewin Dolphin in Inverness, said BG still expected full-year profits to meet expectations.
He added: “The large Queensland Curtis natural gas project in Australia and the fast-track development of the Santos basin off Brazil remain on course, both of which are the most likely sources of long-term growth for the company.”
It is estimated around 5,500 tonnes of gas escaped before Total plugged the Elgin well in May.
Total chief executive Christophe de Margerie has previously said he expected operations on the platform to resume by 2013.