BP signalled a massive vote of confidence in the North Sea yesterday by announcing plans to spend billions of pounds in Scottish waters over the next few years.
The oil giant revealed it is determined to invest heavily to keep production above the 300,000-barrels-a-day mark – at least until 2020.
The cash injection – against a background of declining overall output – will bring a welcome boost to service firms across the north-east, as well as providing employment for BP’s current workforce of more than 3,000.
BP’s North Sea strategy was unveiled at a presentation in London yesterday, at which it identified 24 significant developments worldwide.
Four of these are in waters off Scotland, the centrepiece being the £4billion phase two development of the giant Clair field west of Shetland.
Matt Taylor, a spokesman for the company’s Aberdeen headquarters, last night hailed it as good news for the city and the North Sea oil and gas industry.
“The BP strategy presentation confirms the importance of the North Sea business to BP,” he said.
“Our intent is to sustain production from the area at around 300,000 barrels a day for the next decade. This is a significant objective.
“If we can continue to improve the efficiency of how we run our business, and we deliver on our plans, then this is achievable.
“We’re excited by the potential for the business over the next decade, and we believe we have the people and organisation to succeed. Our plan is to invest over £1billion capital each year, which should be good news for Aberdeen and the North Sea.”
Clair was one of the largest undeveloped reservoirs in the UK continental shelf before production started in February 2005.
Its recoverable reserves were originally estimated at 250million barrels of oil. However, a further 4.75billion barrels remain to be tapped.
Two platforms weighing a total of 70,000 tonnes will be needed for Clair phase two – known as Clair Ridge – which is expected to come on stream by the middle of 2015.
Daily production at Clair Ridge is expected to reach 120,000 barrels.
Another major development is intended to extend the life of BP’s Schiehallion oil field west of Shetland. The preferred option is believed to involve spending more than £1.3billion replacing a floating production vessel.
The other two big BP projects outlined yesterday were the Devenick gas field and the Kinnoull oil field, both north-east of Aberdeen.
Final investment decisions on all 24 projects will be made by the end of 2011.
The vote of confidence received a warm welcome from oil service firms last night.
Cosalt Offshore chief executive Calum Melville said: “The announcement by BP is really positive news and shows what many of us in the industry keep saying is true – there is still a great future in the North Sea and there are many opportunities out there for the service sector.
“BP’s long-term commitment reinforces the fact that this is still a viable region and will continue to be one for years to come. The government also has a major part to play in providing suitable tax incentives to encourage further exploration and capital expenditure.”
Dominion Gas chief executive George Yule said: “The intent of BP is very welcome news for an oil field service community that has had to endure significant financial pressures as a result of the recession.”
Aberdeen North Labour MP Frank Doran said: “This is very good news for Aberdeen and the north-east and it is particularly encouraging BP is still committed to the UK offshore oil and gas industry. I am pleased at the likelihood of jobs being preserved in the city.”
SNP energy spokesman Mike Weir said: “This is wonderful news. It is a very significant investment.”
North-east Lib Dem MP Sir Robert Smith said: “Such investment reinforces the message that there is still life offshore. These are the sort of projects that are vital to securing thousands of jobs in the north-east.”
BP said yesterday that it will start production at 42 major projects worldwide over the next five years as existing fields decline.
The schemes will contribute 1million barrels of oil a day by 2015 – more than offsetting falling output in older fields. BP, which will spend about £10billion on exploration and production this year, expects production to rise by between 1% and 2% a year to 2015 and is confident of further growth to 2020.
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