HURRICANE Energy has said it has passed a critical milestone in its plans to bring the giant Lancaster oil field into production West of Shetland.
The Surrey based company has finished work on the mooring system that will play a key role in the production facilities on the field.
It is on track to bring Lancaster on line in the first half of 2019 using a floating production vessel.
Hurricane’s progress will be studied with interest amid hopes the Lancaster project could help encourage a surge in drilling in the relatively under-explored waters West of Shetland.
If all goes to plan, Lancaster will be one of the biggest fields developed in the UK North Sea in recent years. It is estimated to contain around 500 million barrels.
Aim-listed Hurricane decided to go ahead with the development in spite of the challenge posed by the plunge in the crude price from 2014, which triggered a deep downturn in the industry.
The company raised around £400m last year from investors to fund work on bringing the field into production.
Yesterday’s update from Hurricane came amid indications majors have been emboldened to take an increased interest in the West of Shetland area following the partial recovery in the crude price since late 2016.
Announcing a 300 per cent increase in second quarter profits on Tuesday, BP noted that it had made strategic moves West of Shetland in recent months.
The company increased its interest in the Clair field off Shetland in July, through a deal with ConocoPhillips.
BP said Clair was an advantaged oil asset with growth potential. It is preparing to start production from the second phase of the development later this year and is already thought to be planning phase three.
The enthusiasm partly reflects the fact that while developing assets off Shetland is costly companies can achieve high profit margins on the output by using modern technology.
They may see more chance of making finds off Shetland that are big enough to justify developing than in parts of the North Sea where there has been more drilling.
BP made a discovery West of Shetland in January and acquired more exploration acreage in the area in the latest UK licensing round.
Founded by geologist Robert Trice in his garden shed in 2005, Hurricane has focused on a granite basement area beneath the sandstone layer on which most activity has been concentrated.
Mr Trice said the company was delighted to have completed the mooring system installation during a window of favourable weather.
Some firms have faced big challenges operating in the Shetland area after finding themselves hampered by stormy weather.
London-based Premier Oil started production from the Solan field West of Shetland around 18 months later than planned, in April 2016. It has noted the impact of bad weather and low productivity on the development.
Premier produced an average 4,500 barrels oil equivalent daily from Solan in the first half. When the field was brought onstream, Solan was expected to be producing 20,000 boed or more by the end of 2016.
Premier brought the Catcher field east of Aberdeen into production on schedule and under budget last year with Cairn Energy.
Hurricane will use a floating production storage and offloading vessel on Lancaster. The FPSO will be secured to the mooring turret and connected to subsea wells.
The initial production system will target 37m barrels reserves and could pave the way for a much bigger development.
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