The UK West of Shetlands (WoS) doesn’t often take the limelight as a frontier area that is becoming a developing hub, but here are some reasons it should: Movers and shakers like Total, BP and Premier operate producing fields in the area; Chevron had been working to towards and FID for Rosebank, and Equinor will soon take over the reins; and Siccar Point and Nexen have exploration and appraisal drilling planned for the near future.
BP commenced production in the basin at Foinaven Field in 1997, and soon added Loyal and Schiehallion; all three fields produce oil via FPSO, and gas via pipeline to Sullom Voe terminal. Since then, Clair, Greater Laggan Area, and Solan have all been brought to production, with Clair Ridge set to join later this year.
To date, the basin has produced over 0.5 Bbo and 0.6 Tcfg, but the area is challenging due to the remoteness, harsh weather, and water depths which reach over 1,000m towards the UK-Faroe Islands border. The progression from discovery to production (Fig. 1.) has often been drawn out; Laggan took 30 years to bring online, Clair 28 years, and Solan 25 years. The delays at Clair can at least partly be explained by the difficult, fractured reservoir, and BP’s focus on Foinaven, Schiehallion and Loyal. The Greater Laggan Area development required significant investment to construct the Shetland gas processing plant and install a 142 km oil and gas export pipeline, one of the world’s longest deepwater tie-backs to shore. The Total-led partnership invested US$5.4 billion in the project but lead contractor Petrofac still lost over US$ 400 million on the project. Appraisal at Solan was initially unsuccessful, until Chrysaor obtained better drilling results in 2007 and then sold the field onto Premier.
Ongoing development, exploration & appraisal
What you will likely have heard a lot about, is Hurricane Energy’s 100% owned early production system at the Lancaster fractured basement field due to come onstream via FPSO at the end of 2020, with estimated resources exceeding 200MMbo. Before that, BP intends to commence output from Clair Ridge, due online this year, and expected to produce until 2050. Elsewhere, Equinor is acquiring Chevron’s operator share of Rosebank discovery with 2P reserves of 125-150 MMboe in Flett Formation. Chevron had been working towards FID on the field, with development costs of US$ 7 billion indicated in 2017.
Siccar Point acquired OMV UK at the beginning of 2017, including the Cambo discovery in Palaeocene Flett Formation. Alongside new partner Shell, it was appraised during summer 2018, and Cambo resources are estimated at 177 MMbo and 109 Bcfg. And Total made the most recent discovery in the basin with the Glendronach NFW in Q2/Q3 2018, estimated to hold 1 Tcfg in Early Cretaceous reservoir (42m net pay), drilled from the Edradour platform location, and likely to be developed as part of the Grater Laggan Area.
Planned exploration and appraisalLooking ahead, Nexen and partner INEOS plan to appraise Cragganmore discovery in Palaeocene Vaila sands during Q4 2018. Siccar Point intends to drill Lyon and Blackrock prospects in 2019. Lyon was scheduled for 2018 but delays at the WoS Cambo appraisal well pushed the drilling into winter 2018/19. Lyon has estimated 1-3 Tcfg recoverable in Flett sandstones which could justify a stand-alone gas hub development.
Spirit Energy, the Centrica and Bayerngas Norge joint venture, agreed to farm into Hurricane’s fractured basement play for 50%, and later operatorship in Lincoln discovery and Warwick prospect in September 2018 for full carry on a 2019 planned drilling campaign of two horizontal exploration sidetracks on the Warwick prospect and one appraisal horizontal sidetrack at Lincoln, plus partial carry of Hurricane’s costs of a resultant field development.
The WoS has benefited from the combination of new companies backed by investment and established supermajors working together. The UK 30th round, targeting frontier areas saw awards announced in May 2018 where companies producing and exploring in the WoS picked up the acreage adjacent to their existing licences. In contrast the Faroe Islands 4th Exploration Round in 2017 across the border had its sole application for acreage withdraw post-closing of the round. Overall, development in WoS is looking pretty attractive if you’re willing to put up the capital. The basin will likely see a continued moderately slow build-up of development that will allow small discoveries to be profitable, experience more exploration, and hence be an active region for decades to come.
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