Gas pipeline planned for UK's West of Shetlands area

LONDON-The UK government Monday approved four major North Sea field development projects by BP, Kerr-McGee Corp., and Ranger Oil Ltd. that will translate into an investment of just under 1 billion.

The projects include a -320 million gas pipeline linking the deepwater West of Shetland region with BP's northern North Sea Magnus field installation, and a plan to develop Kerr-McGee's West of Shetland Leadon field via a floating production, storage, and offloading vessel (FPSO).

The government also approved BP's planned 210 million investment in its Foinaven field, and another by Ranger Oil of 75 million to develop Kyle field.

The Labor government expects the four projects will create 2,500 jobs in the West of Shetlands, as well as in Edinburgh and Tyneside.

BP's Magnus gas pipeline project¿which will provide the first transportation infrastructure from the West of Shetlands region-builds on plans that BP has studied for over a year.

It would transport gas that now is reinjected into its Foinaven, Schiehallion, and Loyal deepwater fields West of Shetlands to the Sullom Voe terminal, where the gas would displace liquid fuels being used in power generation. Remaining gas will be enriched with natural gas liquids (NGL) at the terminal before being transported to Magnus, where the NGL-gas mixture will be injected to boost production and recoverable reserves.

BP expects the $500 million project will increase Magnus's oil reserves 50 million bbl, extend its field life "several years beyond 2015," and substantially curbing CO2 emissions by reducing flaring.

Magnus, in 186 m of water, came on stream in 1984 and was flowing at 70,000 b/d. It is the most northerly field in the UK sector.

Kerr-McGee plans to develop Leadon, Birse, and Glassel fields using subsea horizontal wells tied back to an FPSO. The UK government said 800 jobs would be created at the Swan Hunter Ltd. yard on Tyneside during construction of the vessel.

Development costs are $600-700 million. Kerr-McGee expects first flow from the Leadon area fields in early 2002, with peak production of 50,000 b/d following by the end of that year. The fields are estimated to hold up to 170 million boe.

UK Energy Minister Helen Liddell said she hoped the Leadon field, first discovered in 1979 but left fallow until reappraisal by Kerr-McGee, would "set a pattern for others to follow" in the North Sea.

The second BP project, at Foinaven field, would boost production 85 million bbl through additional drilling.

BP is producing a combined 200,00 b/d from its Foinaven and Schiehallion developments.

Details of Ranger Oil's development of Kyle field were not available.

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