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Flurry of activity in North Sea oil sector

By William Clarke
Published: Wednesday, 24 May 2017

BP sees 'return to growth' as production starts at major site and Ineos snaps up £1bn of energy assets, while Wood Group teases exit from the region

There has been a flurry of activity in the North Sea oil sector, with BP hailing a "return to growth" in its North Sea business, as the first barrels were pumped following a $4.4bn upgrade to its Schiehallion field, while Ineos announces a £1.1bn ($1.4bn) purchase of energy assets.

BP, along with co-venturers Shell and Siccar Point Energy, announce that production had begun at the redeveloped Schiehallion Aree, and is expected to ramp up to 130,000 barrels by the end of 2017.

Schiehallion and the adjacent Loyal fields, have been producing since the late 90s, with nearly 400m barrels pumped so far.

"With the fields’ redevelopment through the Quad 204 project, BP and co-venturers expect to unlock a further estimated 450m barrels of resources, extending the life of the fields out to 2035 and beyond," BP said.

Bob Dudley, chief executive at BP, said "the start of production from Quad 204 - one of the largest recent investments in the UK - is an important milestone for BP, marking a return to growth for our North Sea business".

Drilling activity is a key driver of demand for oilfield minerals, such as barite.

Flurry of activity

BP last year announced plans to double its UK North Sea production to 200,000 barrels of oil a day, announcing its intention to sustain business in the region for "several decades," commitments it re-affirmed this week.

Production at the Claire Ridge site in the West of Shetland area is expected to begin next year, with reserves estimated at 640m barrels, sustaining production until 2050.

"Over the next 18 months, BP plans to participate in up to five exploration wells in the UK, in addition to drilling approximately 50 development wells over the next 3-4 years," the oil company said this week.

And BP is not the only producer to see opportunities in the North Sea energy sector.

On 24 May the chemical giant Ineos agreed to buy Dong Energy’s portfolio of North Sea oil and gas assets for some £1.1bn, as part of an ongoing push into the petrochemical segment.

But just as some are trying to get into the market, others are planning an exit.

A prospectus published by Aberdeen-based Wood Group on 23 May showed the oilfield services company is planning to sell off "the majority" of its Amec Foster Wheeler’s North Sea oil and gas assets.

Wood is currently in the process of taking over its rival, and the spinning out of the energy assets is designed to ease this process. 

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