OIL giant Shell has announced one of its biggest Scottish North Sea energy projects in the past decade which will pump 5 per cent of Britain’s gas needs at peak production.
The British/Dutch company said yesterday it would develop the Fram oil and gas field about 135 miles east of Aberdeen following the green light from the Department of Energy and Climate Change.
Energy minister John Hayes said: “The durability of oil production in the North Sea constantly confounds expectation.
“It is a tribute to the high-tech advances and expertise of British industry, which has constantly pushed the boundaries of what can be produced. Fram itself will add around 2 per cent to our [total] oil and gas production – securing jobs, creating revenue and adding to our security of supply.”
Shell, which shares the field with US-based Exxon Mobil, said Fram will come on stream in three years and produce 35,000 barrels of oil and gas equivalent a day (boepd) at its peak.
Glen Cayley, Shell’s vice-president of technical, Europe, hailed the “exciting” exploration and production project which he said would safeguard and create an unspecified number of jobs and have a 20- to 30-year field life.
“Large developments such as Fram will stimulate supply chain and employment opportunities in this latest phase of development for the UK Continental shelf,” he said.
Two-thirds of production from Fram will be gas, and it will be developed using cutting-edge technology. This will include a floating, production, storage and offloading (FPSO) vessel and a pipeline spur that will go to St Fergus, near Peterhead. Cayley added: “This will be one of the largest new North Sea field developments in the past decade and one of the largest planned for the next five years.”
The field is about 30 miles west of the line dividing the UK North Sea from Norway’s marine territory in waters roughly 100 metres deep. The development plan contains eight production wells, one production water re-injection well and two subsea drill centres, all producing to an FPSO vessel.
Cayley said North Sea reserves were “in a state of natural decline and we are never going to see the peak production we saw before the late 1990s. But the natural decline is being mitigated with some large North Sea developments and Fram is one of those”.
The Fram development comes amid energy industry criticism that the government has made North Sea fields less commercially attractive because of disadvantageous supplementary tax hikes on production.
But Cayley said while smaller energy projects in the North Sea were sensitive to such a tax backcloth, “larger robust projects like Fram remain attractive in spite of the tax rises”.
On a possible employment boost from the latest project, Cayley said the company “will be able to say more on jobs when we have completed the commercial negotiations”. He said it was likely to be a mix of new and safeguarded jobs.
Shell employs 1,750 in the North Sea, based in Aberdeen, St Fergus and Mossmoran, as well as 4,500 contractors.