Shell (LON: SHEL) has indicated that it hasn’t lost appetite for West of Shetland investment, despite the Cambo oilfield saga 12 months ago.
UK upstream boss Simon Roddy told EV that Shell is, with partners, assessing development of Clair South, the third phase of the huge BP-operated oilfield in the region.
Meanwhile Shell company continues to look at the right moves for its portfolio across the UK sector.
When the Clair field was first discovered in 1977, it was estimated to contain seven billion barrels of oil equivalent (boe).
The second phase, Clair Ridge, came on-stream in 2018, and a final investment decision on Clair South from BP had previously been thought to be on track for 2022 following a delay.
Consultancy Wood Mackenzie has previously estimated the third phase to be a 300 million-barrel development, costing £2.2bn.
Alongside operator BP, big players including Chevron, Shell and Harbour Energy are among the partners on Clair, and by extension Clair South.
Mr Roddy described Clair South as one of the UK’s largest undeveloped resources, which stands against projects of similar scale in the West of Shetland like Rosebank and Cambo.
“There is a substantial volume there and we look (sic) at the next phase of developing that together with BP as the operator.”
© Supplied by ShellShell also holds the largest stake in the BP-operated Schiehallion scheme (44.9%) in the West of Shetland, which is expected to see dozens of new wells drilled through a “multi-year” programme.
Mr Roddy said: “We’re together with BP in Clair and also Schiehallion. They are important assets for ourselves and indeed the other partnerships.
“I think that they (are) looking to deliver the full potential of Clair and Schiehallion, which is exactly consistent with getting the most out of the North Sea.
“We acknowledge that this is a mature basin with a lot of infrastructure which we have in Clair and Schiehallion. So the question is about how do we get the most out of that?”
It’s unclear when an FID could be taken on Clair South.
BP has said than an all-subsea option, rather than a new installation as seen in Clair and Clair Ridge, could be used for the third phase.
Cambo, Clair South and portfolio
Outgoing CEO Ben van Beurden has played up the potential of the West of Shetland in the past.
However, on a decision last year not to progress Cambo to a final investment decision, he said Shell had “better things to do with our money”.
Last December Shell cited the economics of Cambo, rather than climate activism, as its reason not to progress the development.
Despite this it has not exited its stake (although is reportedly trying to sell off this 30% holding).
“We’re still in the licence and still looking at options”, says Mr Roddy on the future.
But its not the only stake that Shell is (reportedly) seeking to exit.
The oil major has been in headlines seeking to sell down holdings of assets near the BP ETAP hub in the Central North Sea recently, and around the Clipper and Leman areas in the Southern sector too.
Despite this, Mr Roddy is keen to highlight the firm’s ongoing commitment to the region with investments like the Jackdaw, Penguins and Pierce projects.
“I note that a lot gets reported…much of which doesn’t necessarily emanate from ourselves.
“Suffice to say, as you would expect, we continue to look at our portfolio and where our investment is most effectively targeted. But, allied with that, if you reflect on what we have been focused on doing in recent years – essentially delivering Shearwater as a hub, so the tie-ins of Fram and Arran. I think Arran was only one of two new fields being brought on stream in 2021.”
Investment
© Image: FFluorAlongside the Fram and Arran tie-ins to Shearwater, Shell has plenty of UK investment to point to.
The Pierce redevelopment – an oilfield for 20 years which will now see gas, formerly reinjected to boost production, exported – is near start-up.
The Penguins FPSO, the firm’s first new manned vessel in the UK for 30 years, has just left China.
And Jackdaw, which reached regulatory approval this year, Mr Roddy describes as a “very significant FID” and will play a “very important” role for the Shell Shearwater hub in the Central North Sea.
Mr Roddy adds: “So whilst on one hand we continue to review the portfolio, on the other we continue to make specific and careful investments over recent years.
“It is fantastic to see that hard work paying off and, at the same time, delivering the oil and particularly the gas that the UK needs.”
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