LONDON (Alliance News) - BP PLC Monday said it has doubled its interest in the Culzean gas development in the Central North Sea, which is expected to eventually produce enough gas to meet 5.0% of the total demand in the UK when it reaches full capacity.
BP now owns a 32% stake in the field after purchasing an additional 16% stake in Culzean from KX Nippon for an undisclosed amount. The field is operated by Maersk Oil, which holds a 50% stake in the field, and JX Nippon now holds an 18% interest following the transaction with BP Monday.
"We are pleased to have deepened our interest in Culzean and we look forward to helping Maersk make this important central North Sea development a success," said Mark Thomas, BP's regional president for the North Sea region.
"This is a challenging time for the industry and we must continue to work together to ensure that when developments like Culzean, or other projects such as BP's Quad 204 and Clair Ridge, come online they can be run as efficiently as possible," he added.
The field is thought to have 250.0 to 300.0 million barrels of oil equivalent lying within it and production is expected to start in 2019 before building up to plateau production of 60,000 to 90,000 barrels per day. At peak production, which is expected in 2020 to 2021, Culzean will be able to supply 5.0% of the total demand for gas in the UK.
"BP has been focusing and refreshing its North Sea portfolio by bringing new fields into production, redeveloping and renewing existing producing facilities and divesting some of its more mature or less strategic assets," Thomas added. "Our deepening in Culzean further demonstrates our commitment to supporting the development of another UK field for the future."
The field - the largest to have been discovered in the UK North Sea in over a decade - was sanctioned at the end of August last year and production is expected to run well into the 2030s once it starts.
The oil industry is currently being very selective with investments, especially in new developments, following the fall in oil prices that started back in the middle of 2014, but BP regards the North Sea as an integral area of the business and is currently in the middle of a five-year programme which will see GBP7.00 billion ploughed into the area with its joint venture partners.
To put that into perspective, USD3.00 billion of that USD7.00 billion is being invested in Culzean by BP and its partners - but they are only contributing 50% of that as some of the expenditure is being funded by the high pressure, high temperature cluster area allowance introduced by the government as part of the package of measures to support the oil and gas industry in 2015.
The allowance supports the development of HPHT projects, which are typically more technically challenging and have considerably higher capital costs,- and encourages exploration and appraisal activity in the surrounding area.
BP shares were up 0.1% to 362.70 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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