CAIRN Energy has made a find thought to contain up to 50 million barrels oil equivalent amid growing interest in the oil and gas frontier areas off Shetland.
Read more: Bumper gas find stokes excitement about West of Shetland frontier
The Edinburgh-based oil and gas independent made the discovery with the Agar-Plantain well drilled east of Shetland with Azinor Catalyst and Faroe Petroleum.
The well was operated by Azinor, which said the fact the find lies close to existing production facilities makes it a highly attractive project.
The discovery underlines the potential of an area in which there has been relatively little drilling compared with areas of the North Sea closer to the UK mainland.
While drilling activity plunged to record lows in the UK following the slump in the crude price that started in 2014, the acreage off Shetland has attracted interest from firms that see the potential to make bumper finds in the area.
Read more: Oil industry interest in West of Shetland intensifies
Advances in technology have encouraged firms to take a closer look at an area in which operating conditions are challenging.
Hurricane Energy has generated huge excitement by making finds estimated to contain more than 500 million barrels West of Shetland.
The much bigger Spirit Energy business recently bought into Hurricane’s acreage declaring it offered an opportunity to participate in the early phases of one of the last known world-class oil development opportunities in the UK.
The Agar Plantain success also highlights the role played by relatively small independents in helping to kick start activity in the UK.
London-based Azinor completed early stage work on the Agar Plantain acreage, which produced results that were encouraging enough for Cairn and Faroe to buy in to the licence this year.
Read more: Shetland exploration prospect generates excitement in oil and gas industry
Backed by the Seacrest private equity firm, Azinor decided the crude price slump had created the opportunity to generate good returns on UK North Sea investments. The price of assets and services fell sharply amid the crude price slump.
Describing the Agar Plantain find as very promising, Faroe Petroleum chief executive Graham Stewart said yesterday: “This is our first exploration well in the UK since 2013 and this together with the award of the exploration licence on the exciting Edinburgh prospect earlier this year marks a return of focus to the UK Continental Shelf which offers significant value potential.”
Faroe has focused drilling activity on Norway in recent years, partly in response to the generous tax breaks that are available for exploration work.
On Wednesday it said the results of a well on the Rungne prospect off Norway were disappointing.
Trade body Oil and Gas UK said Agar Plantain provided a further sign of growing confidence in the North Sea basin following a 50 per cent increase in the number of blocks applied for in the latest round.
The partial recovery in the crude prince since late 2016 and cost reductions in the North Sea have boosted sentiment.
Read more: £200m North Sea field approved
The encouraging news about Agar Plantain for Cairn was tempered by the fact that the well the company drilled on the Ekland prospect off eastern Scotland was dry.
However, the firm is set to win a vote of confidence from a company that has agreed to acquire a 40 per cent interest in the licence containing the Chimera prospect in the UK North Sea, which it did not name.
Chief executive Simon Thomson recently underlined the company’s belief in the exploration potential of the UK North Sea.
Cairn bought in to the North Sea under his strategy of pursuing relatively low risk activity in the region with potentially transformational drilling in what are seen as frontier areas overseas, such as Senegal.
The company last year started to generate huge amounts of cash from UK North Sea assets after bringing the Kraken and Catcher fields onstream with partners.
Catcher is operated by Premier Oil, which noted yesterday that the field has been producing around 65,000 barrels oil equivalent daily over the last month.
The Solan field West of Shetland has been producing in line with revised expectations.
In August Premier said it produced an average 4,500 barrels oil daily from Solan in the first half.
When Premier brought Solan onstream in 2016 the field was expected to be producing 20,000 boed or more by the end of that year. In March Premier noted poor reservoir performance on the field.
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