London — The international majors are sharpening their UK focus on the more prospective west of Shetland area, with BP raising its stake in the Clair field and Chevron hoping to sell its legacy North Sea fields as it plans the West of Shetland Rosebank deepwater project.
BP gets more dominant position at Clair
Chevron says Rosebank still on the cards
Shell eyes Cambo production boost
The announcements Wednesday by BP and Chevron follow Shell's purchase in May of a 30% stake in another West of Shetland project, Cambo, thought to hold "in place" oil volumes of 600 million barrels.
The West of Shetland area is characterized by some of the harshest sea conditions faced by the industry anywhere and has mostly been the preserve of the majors due to higher costs. But the area is also home to most of the sizable projects seen as able to significantly boost UK output, and smaller players are now playing a role.
BP, the operator of Clair, said it was increasing its stake from a mere 28.1% to a more dominant 45.1% with the addition of a 16.5% stake from ConocoPhillips.
Clair's ownership is unusually fragmented, reflecting the field's large extent over 220 square kilometers, spanning numerous offshore blocks.
"This is a further step in focusing our portfolio around core assets and developments which have the potential for significant growth," BP upstream CEO Bernard Looney said. "Clair is a key advantaged oil field... a giant resource whose second phase is about to begin production and which holds great potential for future developments."
Wednesday's swap, described as "cash neutral" by BP, transfers its 39.2% stake in the Alaskan Greater Kuparuk Area to ConocoPhillips, which has been retrenching to the US since the oil price downturn, although it will retain 7.5% of Clair.
Clair crude is heavy, with an API gravity of 23.6 and the field is characterized by low-productivity wells, necessitating extensive drilling.
A $9 billion revamp of the field, Clair Ridge, has been beset by delays, with the new production originally meant to start in 2016, but now due later this year. Existing production dropped to 21,000 b/d of oil equivalent last year.
However BP estimates Clair's original "in place" volumes at 7 billion barrels of oil equivalent.
And Clair Ridge, targeting a different part of the field from the current output, is expected to produce up to 120,000 boe/d.
The project features an enhanced oil recovery technique that reduces the salinity of water injected into the field to maintain pressure.
BP said Wednesday appraisal drilling had also "identified potential for further stages."
CHEVRON SLIMS DOWN
Chevron meanwhile said it aimed to sell all its conventional North Sea fields, including operating stakes in Alba, Alder, Captain and Erskine.
The announcement is consistent with the gradual withdrawal of US oil majors from the UK, even as European counterparts have professed their commitment to the mature province thanks to cost reductions.
"A decision has been taken to initiate the process of marketing all our UK Central North Sea assets," Chevron said.
Last October Chevron announced a new enhanced oil recovery project at Captain involving injecting water thickened with polymers using six extended-reach wells.
The proposed Chevron sale also includes stakes in the Britannia and Jade fields operated by ConocoPhillips and the Elgin-Franklin fields operated by Total.
But the US major is keeping a 19.4% stake in Clair and it said it was not including in the sale its Rosebank project, thought to hold at least 300 million barrels of oil.
Rosebank is another North Sea project that has been hit by delays, reflecting both the industry's struggle to bring down costs and in particular the challenging sea conditions.
The current license expires next May, with at least some participants expecting a final investment decision before then.
Rosebank, in which Chevron has a 40% stake, "is progressing through Front End Engineering and Design. Chevron continues to work closely with its joint venture participants to review project economics and perform value engineering," it said.
The Cambo project, which Shell entered in May, lies near Rosebank and is operated by private equity-backed Siccar Point Energy, which hopes to take a final investment decision next year.
Shell also holds a 28% stake in Clair, giving it parity with BP before the latest deal, and it has the largest stake in the other big West of Shetland producing field, Schiehallion, even though BP is the operator.
Schiehallion underwent a redevelopment and came back on stream last year, with output expected to reach 130,000 b/d, although the increase has been slow.
However Shell says it is also committed to its central North Sea heartland despite a bit asset sale to private equity-backed Chrysaor in 2016. It has approved two North Sea oil projects, Penguins and Fram, this year.
Commenting on the reduction in BP's Alaskan portfolio, Looney said, "This transaction will increase our focus on managing our deep resource base at the massive Prudhoe Bay oilfield and help enable a more competitive and sustainable business for BP."
