£4bn North Sea investment sees jobs boost

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  By a Newsnet reporter
 
More than 20,000 jobs are set to be created after Aberdeen-based oil drilling company Enquest confirmed plans for a major £4bn investment in an oil field in the North Sea.
 
The company’s field development plan for the Kraken oil field, located about 125 kilometres east of Shetland, was given the go-ahead on Friday by the Department of Energy and Climate Change. The site is expected to come on stream by 2016/17.  The £4bn project will support more than 20,000 jobs during construction and roughly 1,000 jobs in each year of its 25-year life span.

 

The commitment from Enquest – which has a majority 60 per cent interest in Kraken and is working with partners Cairn Energy and First Oil – marks the largest investment announced in the UK North Sea this year, and the news has been welcomed by Scottish Energy Minister Fergus Ewing, who said that it was clear that there were significant opportunities in the North Sea that would bring big benefits to the Scottish economy.

“I had the pleasure of meeting with EnQuest in September this year and I warmly welcome this announcement of £4 billion investment in the Kraken field east of Shetland and the job creation and supply chain opportunities it will bring,” said Mr Ewing.  “This follows on from a host of significant investment announcements recently – unequivocal evidence of the faith that the oil and gas industry has in the future of the North Sea as an oil producing province.

“This is also clear evidence that new opportunities still exist in the sector.  Scotland’s industry-led oil and gas strategy sets out an overall theme of maximising resource recovery through a focus on industry led innovation, skills and supply chain growth.  With up to 24 billion recoverable barrels with a potential wholesale value of £1.5 trillion, more than half of the resources in the North Sea, by value, still to be extracted, it is clear that the industry will make an important contribution to the Scottish economy for decades to come.”

The Kraken oil field will be Enquest’s sixth production hub in the UK North Sea and it’s estimated that net peak oil production will reach over 30,000 barrels of oil equivalent per day. Gross reserves at the site are expected to be as much as 140 million barrels of oil – a figure that will see Enquest’s reserves boosted by around 50 per cent.

Enquest chief executive Amjad Bseisu said: “Kraken is a transformational project for EnQuest and we are delighted to be able to proceed with it, working with the government and our partners to maximise the extraction of approximately 140 million barrels of oil in this field, over its 25-year long life.”

The company has already seen an improved performance this year thanks to North Sea platform Thistle, which had a new production well come on stream in mid-August.  The company’s average production between 1 January and 31 October this year has increased by 7.2 per cent year on year.

The Kraken project will also bring Malaysia-based international offshore oilfield services provider Bumi Armada into the North Sea for the first time after the company confirmed it had secured a letter of interim agreement to build the FPSO (floating production storage and offloading unit) for the site, which will support the 25 wells in the Kraken field. The FPSO will have a storage capacity of 600,000 barrels.

The news was also welcomed by UK Chancellor George Osborne and industry body Oil and Gas UK, which said the development would be a “valuable source” of primary energy to enhance the security of the country’s supply and would generate revenues for the Treasury.

Meanwhile, a well-known American bank which was set up for gold rush pioneers in 1800s, Wells Fargo, is making the move to Aberdeen as a result of the increased investment in North Sea Oil.   The iconic company’s energy group has announced it is to expand in the UK and Aberdeen has been chosen for the location of its first branch.

Speaking to the Press and Journal, Kendal Milne, the man who will lead the new venture said: “The business has a strong history with oil and gas, and it’s the industry’s largest lender in North America,”

“With that experience, the natural extension was to come to the UK, and where better than Aberdeen.”