First gas from Shell Pierce redevelopment slated for autumn, all eyes on China for Penguins FPSO sailaway

A slight delay to the start-up of the Pierce gas expansion project in the UK North Sea has been confirmed.

Shell (LON: SHEL) previously expected the redevelopment project, about 165 miles east of Aberdeen, to come on stream in the second quarter of this year.

It now anticipates first gas from Pierce – which will be produced via the Haewene Brim floating production storage and offloading (FPSO) ship – this autumn.

The vessel arrived at the North Sea field in July after months spent at the Aibel yard in Haugesund, where refurbishment work was carried out.

Pierce was first brought online in 1999 and is owned 92.52% by Shell, with the remaining 7.48% held by Ithaca Energy.

It has historically been an oil-producing field, with associated gas being compressed and reinjected.

This new project will allow for associated gas to be exported via a new pipeline to the St Fergus terminal in Aberdeenshire.

Shell chief financial officer, Sinead Gorman said: “As we said, we’re expecting first gas from Pierce this autumn. It is on track to get the gas through very quickly, which we’re very pleased about.”

© Supplied by Shell

Ms Gorman also gave an update on the sailaway date for the Penguins FPSO, which will be the first new manned vessel for Shell in the northern North Sea for 30 years.

Construction of the production vessel for Penguins – a redevelopment of a tie-back field to the Brent Charlie hub – has been hampered by Covid and lockdown-related delays.

At the time of investment decision in 2018, Shell said the redevelopment is expected to unlock 80 million barrels of oil.

It had been thought that the vessel would leave China for the north-east of Shetland field in Q3, but it’s not clear if that is still the case.

© Supplied by Shell

Ms Gorman said: “Penguins has had the impact of Covid, and that is the reality for many projects across the industry.

“We do still expect it to be back on track – we’re expecting it this year – but we’re watching very closely. China plays a major role in that, in terms of being able to safely manage the workforce.”

Shell reported back-to-back record quarterly earnings on Thursday as the supermajor raked in pre-tax profits of $39.9 billion.

But despite its buoyant balance sheet, chief executive Ben van Beurden stressed that the company’s position on the Cambo field hadn’t changed, and it still has no plans to progress the project.