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Maersk Oil's Culzean gasfield given approval

01st September 2015

Production on the largest new oil and gas field to have been discovered in the North Sea for a decade has been approved by the UK Oil & Gas Authority

The Culzean field in the North Sea
The Culzean field in the North Sea

The UK approval is an important milestone in the Culzean project, which is part of Maersk Oil’s ambition to become a top-five producer in the North Sea. Discovered in 2008 by Maersk Oil and its co-venturers, including JX Nippon, the gas condensate field has resources estimated at 250-300 million barrels of oil equivalent.

Maersk Oil is looking for new long-term growth opportunities in the North Sea, investing heavily in projects and improving the efficiency of operations. Culzean is a natural gas field so helps diversify the company’s oil-dominated portfolio.

Production is expected to start in 2019 and continue for at least 13 years, with plateau production of 60,000-90,000 boe per day.  It is the largest gas field sanctioned by the UK since East Brae in 1990, according to consultancy Wood Mackenzie.

“Culzean is an important development for the UK and also for Maersk Oil and our co-venturers. We are pleased the field will support UK economic growth as well as extend understanding of HPHT development,” said Maersk Oil CEO Jakob Thomasen.

“Culzean is the latest in a series of large investments by Maersk Oil in Denmark, Norway and the UK  – reflecting our commitment to the future of the North Sea region and diversifying Maersk Oil’s portfolio.”

High pressure, high temperature
Challenges associated with developing the Culzean reservoirs include temperatures of up to 175C and high pressure that is equivalent to being 9 kilometres underwater, requiring specialised equipment that can handle the extreme conditions. This makes the project more capital intensive, with total investment expected to be about £3 billion, of which Maersk Oil’s share is about half.

“Today’s announcement sends a clear signal that the North Sea is open for business,” said the UK Chancellor of the Exchequer, Rt Hon George Osborne MP. “Already the UK’s oil and gas industry supports hundreds of thousands of jobs across the country and this £3 billion investment comes on the back of massive government support for the sector.

“Despite challenging times, this government has backed the oil and gas industry at every turn, introducing a vital package of support to help it to protect and create jobs.”

North Sea opportunities
The North Sea region has an estimated potential of 26–38 billion barrels yet to be discovered, according to national oil agencies, and it remains a technically attractive province for future development, provided costs and regulatory regimes continue to incentivise investment.

Maersk Oil has a share in Johan Sverdrup, one of Norway’s largest ever discoveries, and in the UK’s Golden Eagle, which started production in 2014. The Tyra Southeast expansion in Denmark has added production from a current asset. At plateau production, Culzean and these other projects will add about 90,000 boepd to Maersk Oil’s entitlement production.

“Sanction of this landmark project represents a major achievement and an exciting milestone for Maersk Oil UK,” said Morten Kelstrup, Maersk Oil UK Managing Director. “In particular today I’d like to congratulate the business unit for its outstanding delivery on portfolio development milestones, from discovery in 2008 to today’s government sanction.”

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