Although the weather may be turning colder, exploration West of Shetland is hotting up, writes our Chief Executive Chris Cox.
We are entering the time of year when the nights draw in, the days get colder and the weather becomes wilder.
This is particularly true in the waters of the Atlantic Ocean West of Shetland, exposed as they are to the elements – but as the temperature drops, exploration for potential oil reserves in the region is hotting up.
Operators large and small are eager to tap into the opportunities hundreds of kilometres off the Scottish mainland and, although weather conditions make winter drilling challenging, 2019 could be a critical year for the future of the West of Shetland basin and the UK’s oil and gas industry.
With BP nearing first production from the Clair Ridge development – and a third phase of the project looking likely thanks to further appraisal work – and Siccar Point Energy reporting successful results from its recent Cambo appraisal well and planning exploration drilling at Lyon in the spring, the coming months could prove up hundreds of millions more barrels of oil and decades more production. Spirit Energy also recognises the huge scale of opportunity West of Shetland, and as part of our strategy to create a sustainable, European exploration and production business, early next year we will make our first investment in exploration and appraisal in the area by funding three wells, drilling into one of the UK’s last known world-class oil development opportunities.
Significant developments mean significant investment
The size of the prize these wells are targeting in the Greater Warwick Area is potentially huge – our £139 million campaign will be targeting 604 million barrels of contingent resources at the Lincoln discovery and 935 million barrels of prospective resources at the Warwick prospect.
The work is part of our efforts, alongside operator and partner Hurricane Energy, to further prove up an area with vast potential – the licences form part of the Rona Ridge, which independent analysis revealed contains 2.6 billion barrels of reserves and resources. To put that into perspective – that is around a tenth of what experts believe is left in UK waters in total.
Assuming success with the three wells we drill next year, we will then look to invest even further in the fields, linking one of the wells to a floating production vessel already on its way to the region to start early production from Hurricane’s nearby Lancaster field. It also opens up the opportunity for a further three wells and ultimately full field development for the Greater Warwick Area, providing a boost to the UK’s energy sector with further domestic production at a time of great uncertainty globally, as well as helping to maximise economic recovery from the UK Continental Shelf.
With developments at this scale comes investment running into the billions of pounds – BP’s Clair Ridge development will come in at £4.5 billion – supporting a UK supply chain which has suffered in recent years as the oil price collapsed. Not only that, it gives the service industry the opportunity to build expertise in frontier conditions, giving them the platform to export their skills across the world long after the work here is done. In the week of Oil & Gas UK's annual Share Fair - a meeting of operators and supply chain to discuss shared opportunities and challenges across the UK Continental Shelf - commitments like these give us hope for a successful future in both mature and fledgling basins.