OFFSHORE EUROPE

San Leon claims that the new, larger entity will have greater financial, technical, and operational resources to develop gas fields such as Schull and Old Head of Kinsale. Their output will be needed to offset declining output through the Kinsale complex just offshore southern Ireland, which Star Energy/Petronas, recently acquired.

Island also has deepwater exploration acreage off western Ireland. San Leon has agreed an equity arrangement with PGS, whereby the latter would fund 40% of the costs of a planned program of work on the licenses.

PGS has signed another strategic accord in this region with Ireland’s other leading player, Providence Resources. This will take in seismic survey design and acquisition across Providence’s portfolio, notably in the Celtic Sea, which was recently expanded through the award of a licensing option over the Baltimore heavy oil discovery in block 48/19 (p), 30 km (18.6 mi) offshore southern Ireland.

Go-ahead for Gudrun

Following a prolonged trough in development activity on the Norwegian shelf, two groups have launched major construction programs.

Statoil and its partners Marathon and GDF Suez have approved a $3.56-billion development plan for the Gudrun oil and gas field in North Sea license PL 025. This will be based around a 16-slot steel production platform, with production exported to the Sleipner A facilities 55 km (34 mi) to the south, and power supplied by an undersea cable from Sleipner East.

Gudrun, discovered in 1974, is a high-pressure/high-temperature field with reserves estimated at 132 MMboe. Statoil says it will apply technologies tried and tested in recent years on similar fields such as Kristin and Kvitebjorn.

The contract for the 7,100-metric ton (7,826-ton) jacket already has been issued to Aker Verdal, and this is due to be delivered in summer 2011. For parent company Aker Solutions, the award softens the blow of missing out on the topsides for the Goliat FPSO in the Barents Sea, which it would have assembled in Norway. Instead, operator Eni issued the entire $1.17-billion engineering, procurement, and construction contract to Hyundai Heavy Industries in South Korea. Hyundai has subcontracted detailed topsides and hull interface engineering to CB&I in the US.

Lundin, Petrofac combine UK interests

In the UK northern North Sea, Lundin has completed a $170-million upgrade program on the Thistle platform, which included reactivating the drilling rig and installing a new top drive. The facility is now ready to resume drilling for the first time in over two decades, when Unocal was the operator. Lundin has lined up a series of workover and drilling targets identified from recently acquired 3D seismic.

Another reason for the overhaul was to prepare the platform to handle production from Don’s Southwest and West Don fields. Once all these milestones had passed, the two companies announced they were combining their UK operations into a new, independent E&P company called EnQuest. This will be run by Petrofac Energy Development’s chief executive, Amjad Bseisu.

Statoil commits to Faroes well

Faroese Trade and Industry Minister Johan Dahl has approved extensions to offshore exploration licenses 006, 009, and 011. All are operated by Statoil – two as 100% stakeholder, following the withdrawals by Anadarko and Hess among others. The revised terms include a firm commitment by Statoil to drill one well prior to expiry of the licenses in 2013, the location of which has yet to be determined.

According to Dahl, the Ministry recently received notification of two further exploration wells, one of which will be drilled on Eni’s 005 license this spring.

UK output, drilling in decline

Production from fields on the UK shelf dropped 6% last year to an average of 2.4 MMboe/d, according to the latest overview by industry association UK Oil & Gas. “We had hoped for a smaller decline,” says Mike Tholen, Economics director, “but investment and development were both slower than expected.”

Capital expediture across the sector dipped slightly to $7.16 billion. “We had feared worse,” Tholen says, “but the recovery in the oil price restored some confidence.” On the plus side, operating expenditure eased back to $10 billion, helped by falls in drilling services and oilfield equipment costs.

Only eight new fields came onstream in UK waters last year, down from 17 in 2008, and a mere six development projects went forward. Both factors contributed to a 22% slump in development drilling to 130 wells. Exploration and appraisal activity also fell, with a total of 66 wells drilled, 40% down on the figure for 2008.

This year, Oil & Gas UK has identified plans for 43 firm E&A wells, with a further 20 or so to be confirmed. The central North Sea remains the most favored region, along with the Atlantic margin west of Shetland, which delivered numerous discoveries in 2009.