Royal Dutch Shell’s final investment decision (FID) on the redevelopment of the Penguins Field in the U.K. North Sea authorizes the construction of an FPSO unit, the company’s first in the northern North Sea in almost 30 years.
Redevelopment of the field, which became necessary because the Brent Charlie platform will cease production, will involve the eight additional wells drilled to be tied back to the new FPSO vessel. Additional pipeline infrastructure, along with existing subsea facilities, will be needed to move natural gas.
Penguins, which was discovered in 1974, is a 50:50 joint venture (JV) between Shell and ExxonMobil. It was first developed in 2002.
“Shell and Exxon taking FID on the Penguins redevelopment in early 2018 is very positive for the North Sea, marking the end of a cautious era during the downturn,” said Fiona Legate, Wood Mackenzie senior research analyst. “The Penguins redevelopment is expected to produce around 80 MMboe via a newbuild FPSO development. This is the largest FID since Culzean [gas field] in August 2015 and shows market confidence has returned. We are expecting up to 14 U.K. FIDs in 2018. Penguins is the second largest by reserves.”
The FPSO unit, which will be a JV-owned and Shell-operated Sevan 400, is expected to have peak production of about 45,000 boe/d. Tankers will transport the oil to refineries, and the FLAGS pipeline will move gas to the St. Fergus terminal in northeast Scotland.
The Penguins cylindrical FPSO unit will be Sevan Marine’s sixth. Fluor has been awarded the engineering, procurement and construction contract.
“Penguins demonstrates the importance of Shell’s North Sea assets to the company’s upstream portfolio,” said Andy Brown, upstream director at Shell. “It is another example of how we are unlocking development opportunities, with lower costs, in support of Shell’s transformation into a world-class investment case.”
Deirdre Michie, CEO of Oil & Gas UK, called the news “an exciting start to the new year. A global leader like Shell making a commitment on this scale demonstrates the investment potential the U.K. Continental Shelf still holds. It also shows the importance of the efficiency improvements our industry has delivered, which have helped make redevelopment projects like this commercially attractive. We are hopefully entering a more positive phase for our industry in the U.K. with new projects on the horizon that I hope will bring a much needed boost for companies in the supply chain.”
The Penguins Field is in 165 m (541 ft) of water, about 241 km (150 miles) northeast of the Shetland Islands.
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