North Sea industry received a shot in the arm yesterday as oil and gas companies reported progress on major projects.
Hurricane Energy said commissioning work was under way ahead of first oil from its 500 million barrel Lancaster field, west of Shetland.
Meanwhile, Neptune Energy provided the UK North Sea’s first final investment decision (FID) of 2019, with a commitment to develop the 50m barrel Seagull asset.
The production vessel for Hurricane’s wholly-owned Lancaster field was hooked up this month and is expected to start pumping in the first half of 2019.
The company is developing an early production system (EPS) expected to deliver 17,000 barrels of oil equivalent per day.
At the Brent crude price of $60 per barrel, Hurricane estimates it will generate annual operating cash flow of more than £150m.
The EPS will also provide reservoir data which will help London-headquartered Hurricane plan for a full field development at Lancaster.
And Hurricane expects drilling to start on the Warwick Deep well next month. It will be the first in a three-well campaign planned for the Greater Warwick Area (GWA), also west of Shetland.
Partner Spirit Energy agreed to stump up £139m to cover the cost of the campaign, which targets 2 billion barrels of oil, as part of a deal that saw it acquire 50% of GWA.
London-listed Hurricane provided the update in its 2018 results announcement, which showed pre-tax losses of £46.6m, widening from a deficit of £5.3m in 2017.
With Lancaster on track to come on stream soon, Hurricane said the 2018 annual report would be its last with no revenue.
Hurricane chief executive Robert Trice said the Lancaster revenues would help the firm go after further appraisal and development activities in its portfolio.
Neptune said Seagull should produce about 50,000 barrels of oil equivalent per day over 10 years.
The field will be tied back to BP’s ETAP central processing facility in the central North Sea.
First oil is expected by the end of 2021.
Neptune acquired its 35% operated interest in Seagull from Apache last year.
Its partners are BP with 50% and Japanese exploration and production company Japex with 15%.
Neptune chief executive Jim House said: “Seagull is a low cost, near-term development in close proximity to existing infrastructure.
“It complements our existing assets in the North Sea and provides growth and greater diversity for our UK business.”
Neptune was founded in 2015 by former Centrica boss Sam Laidlaw and is backed by China Investment Corporation and funds advised by Carlyle Group and CVC Capital Partners.
Mike Tholen, Oil and Gas UK’s upstream policy director, said: “Neptune’s Seagull project signals the basin’s first FID of 2019 and demonstrates a growing appetite among North Sea players to establish a diversified portfolio making the most of the variety of opportunities the basin offers.
“The UK Continental Shelf continues to reinforce its position as an attractive investment opportunity. Fresh investment in the basin is key if we are to maximise the estimated 10-20 billion barrels of oil remaining, in line with Vision 2035.
“This project also highlights the importance of the UK’s existing infrastructure network in making the basin an attractive place to invest. It is estimated that there are more than 3 billion barrels of oil and gas contained in marginal fields on the UKCS and being able to tie back to existing infrastructure will be key to unlocking this potential, helping to ensure the industry’s bright future for many decades to come.”
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