BP, along with three partners, will invest £10 billion over the next five years to develop four new oil and gas projects in the UK.
The UK government on Thursday granted BP and its partners — Shell, ConocoPhillips and Chevron — approval to proceed with the £4.5-billion Clair Ridge project, the second phase of development of the giant Clair field, west of the Shetland Islands.
For BP, whose share of the total investment in the four projects will be around £4 billion, this represents the highest level of annual investment it has ever made into the UK North Sea. Over the next few years, BP will be bringing on stream more new major project developments in the UK than it has ever done over a comparable period, the company said.
“Although it began over 40 years ago, the story of the North Sea oil industry has a long way yet to run. BP has produced some five billion barrels of oil and gas equivalent so far from the region and we believe we have the potential for over three billion more,” said Bob Dudley, BP’s group chief executive, at the company’s North Sea headquarters at Aberdeen on Thursday.
“After some years of decline, we now see the potential to maintain our production from the North Sea at around 200,000-250,000 barrels of oil equivalent a day until 2030. And we are working on projects that will take production from some of our largest fields out towards 2050,” Dudley said.
Over half of the total investment in the projects is expected to be spent in the UK. At their peak, taken together, the projects will provide some 3,000 UK oil and gas supply chain jobs, and will play a major part in sustaining the more than 3,500 jobs already existing in BP’s North Sea operations.
“The oil industry directly employs around a quarter of a million people in the UK, with a further 200,000 or so jobs either supported by the economic activity of its employees, or created through the export of oilfield goods and services,” Dudley said.
The Clair Ridge project, which will install two new bridge-linked platforms with the capability to produce an estimated 640 million barrels of oil, is planned to come on stream in 2016 and to extend production from the greater Clair area to 2050. In addition to the 600 people already working on the project, it will provide hundreds of engineering, drilling and oilfield services jobs over the field’s life.
In the central North Sea, with partner RWE, BP’s £550 million development of the Devenick gas field recently passed a significant milestone when its 600-tonne module was successfully lifted onto Marathon Oil’s East Brae platform. At its peak, the project has provided over a thousand design, engineering, construction and commissioning jobs and once it comes on stream in 2012, it is expected to supply up to three per cent of the UK’s gas needs.
Earlier this year, BP and its partners also announced plans for the £3 billion redevelopment of the Schiehallion and Loyal fields, west of Shetland, and the £700 million development of the Kinnoull field in the central North Sea.
Together with development drilling and a number of smaller projects, these four projects represent almost £10 billion of new major project investment by BP and its partners into the UK continental shelf over the next five years.
In August this year, BP announced the completion of its $7.2-billion acquisition of a 30 per cent stake in 21 oil and gas production sharing contracts that Reliance Industries operates in India, including the producing KG D6 block. This is a part of BP’s strategy to move towards the east to secure oil and gas blocks.
While announcing its partnership with Reliance, BP had said the rationale of the deal from its perspective was the shift in global energy demand. Dudley had said in the coming decades, two-thirds of the world energy consumption would be in emerging markets like India and China. “BP being a global energy company, we need to be part of this growing opportunity,” Dudley had said.
