March 1, 2003
Shell Expro has committed to a rare new gas production hub in the UK southern North Sea.

Jeremy Beckman

Northern extension for gas network

Shell Expro has committed to a rare new gas production hub in the UK southern North Sea. It is to spend £150 million on development of the Carrack field in block 49/14b, with provision for future tie-ins of other nearby accumulations.

The location, 120 km off the north Norfolk coast, is an area relatively remote from the mass of trunklines and compression centers pumping gas to terminals in Bacton, Easington, and Dimlington.

Lowestoft-based fabricator SLP Engineering has a £40 million contract to supply two new platforms for this project. One will be based on Carrack, while the other – a reception facility for Carrack's gas – will be placed next to Shell Expro's Sole Pit facilities, 85 km distant. Allseas Marine Contractors will install the trunkline taking Carrack's gas to this complex. Shell Expro is pushing for first production this December, with output peaking at 160 MMcf/d. Carrack is a Rotliegendes sandstone reservoir, with estimated reserves of 300 bcf.

The same operator coincidentally announced a new discovery, named Nessie, close to its producing Brigantine field, also north of Norfolk, in blocks 49/20a and 20b. The well and a subsequent sidetrack were both drilled by jackup Santa Fe Britannia in 104 ft of water.

Recently, Shell Expro and its Dutch counterpart NAM (both are joint ventures between Shell and ExxonMobil) decided to pool their southern North Sea gas production operations under the title ONEgas. The new organization's assets will include from the UK side the Sole Pit, Silver Pit, and Sean complexes. Both parties aim to improve prospects of securing investment from their parent companies following the resultant operational synergies.

Forties No. 2 for Apache

BP's sale of its 96.3% stake in the Forties field to Apache could be the first of several North Sea transactions. Its Indefatigable and Leman complexes in the southern sector may be next to go. These were among the prize assets that came with BP's purchase of Amoco. BP no longer rates the UK – now a high-tax as well as a highly mature province – in its top five global growth spots.

Forties field location. BP has not sold its interest in the associated trunkline to Cruden Bay, eastern Scotland.
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Forties remains the largest oil discovery on the UK continental shelf (UKCS), having produced 2.5 Bbbl since coming onstream in the 1970s, with cumulative capex to date of £9 billion. Analysts Wood Mackenzie believe a further 300 MMbbl remain to be recovered. This puts Forties in second place in Apache's global portfolio, behind its Egyptian Khalda concession. For BP, the field only ranked 30th. The transaction did not include the Forties pipeline system, which also handles production from other UK and Norwegian fields. Wood Mackenzie forecasts tariff income through this system in 2003 of around £220 million.

Other borderline BP assets on the UKCS are thought to include Miller, onstream in 1992. However, production West of Shetland and from the ETAP fields in the central North Sea are not in that bracket. BP is currently expanding ETAP, with Subsea 7 contracted to install a 35-km rigid line as part of the Machar gas lift project. BP and ConocoPhillips have also recently commissioned the Nisus consortium in Aberdeen for design studies relating to redevelopment of the Don and Don West fields. Production here was halted in 2000 due to reservoir difficulties.

Aberdeen and Grampian Chamber of Commerce commented that the sale of Forties "is raising questions within industry about whether more general reassessment of North Sea activities by the major oil companies is likely, and also the number and likely impact of new players operating in the North Sea." That impact may not be so great in the near-term, according to the chamber's latest survey of business prospects for the local oil and gas service sector (October-December). Among the main findings, over half of respondents foresaw continued decline in UK North Sea exploration, while 40% saw a tail-off in production/service activity. In mitigation, the percentages in both cases were down on the previous quarter surveyed.

Majors snub Norway round

The Norwegian Petroleum Directorate confirms that eight oil and gas discoveries were logged off Norway last year, down from 12 in 2001. Most of the new intake were small, said Statoil's Tor Fjaeran, senior vice president for new areas in exploration and production in Norway.

"This underlines the fact that the Norwegian continental shelf is a mature region, and that we need access to attractive new exploration acreage."

Statoil was one of nine bidders in last year's Norwegian North Sea licensing round. Awards are due by mid-year. The only majors in that number were Agip and EssoMobil. Norsk Hydro also signed up, despite having recently shed 300 exploration jobs after paring back its program in Norway.

The other bidders are relatively new to the Norwegian shelf. Paladin Resources recently bought Statoil's interests in two licenses on the maritime boundary with the UK, one containing a small oil find. Norwegian independent OER has since sold 75% of itself to Sweden's Lundin Oil. OER is one of a group chasing minor stakes in producing Norwegian fields, in OER's case as a way of building up production from scratch.

Norsk Agip plans to resume exploratory drilling on its Goliath discovery in the Barents Sea, after a hiatus of two years imposed by environmental concerns. Up to two wells are planned, under a possible rig-share arrangement with Statoil, which wants to test its nearby Dumbo discovery. The sole development project in this area is Statoil's Snøhvit. Spanish fabricator Dragados Offshore recently won the NKr 1.45 billion contract for the LNG barge's gas liquefaction plant.

Faeroese drilling resumes

Block nominations will be invited this fall for the second Faeroese licensing round. The islands' Ministry of Petroleum aims to grant exploration concessions by the end of 2004, even though five first-round license commitment wells have yet to be drilled. Acreage tabled will likely include a few blocks not previously offered.