LONDON�Megamajor BP quickened the pace of the UK North Sea's recovery late last week with the award of the high-status front end engineering design (FEED) contract for its $750 million Atlantic Margin Clair development to Wood Group PLC's US subsidiary Mustang Engineering Inc. The deal, targeted to cement a development plan that could be put before the field partners next summer and move Clair toward first oil by 2004, is worth some $5 million to Mustang, which was last month taken over by Aberdeen-based Wood Group (OGJ Online, Aug. 4, 2000).
Current development plans, centering on the 250 million bbl Clair South reservoir and being handled out of Mustang's Houston offices, are understood to favor a conventional fixed platform for the deepwater field, with oil being transported by pipeline to Scotland's Sullom Voe or Flotta terminal.
BP expects its initial outlay of $750 million at Clair to be eclipsed by a life-of-field investment in the region of $1.5 billion.
Wood Group said detailed design work would begin in the third quarter of next year, with a start to construction following in 2002.
Sir Ian Wood, managing director of Wood Group, said the Clair development fits "exactly" with the vision of "breakthrough thinking and best practice for greenfield topsides engineering worldwide" hatched during takeover talks with Mustang earlier this year.
"The Clair project provides exactly the right challenge for that vision: to permanently change the approach to new field developments on the UKCS [UK Continental Shelf] by combining Mustang's design approach�fit for purpose, minimum design man-hours, and maximum standardization�with Wood Group's in-depth knowledge of UK government, industry culture, programs and practices," said Wood.
Mustang Vice-Pres. Bill Higgs added that he predicts Clair's "different" execution model to be adopted for future North Sea developments.
Magnus EOR gets green light
BP's long-anticipated plans to drive ahead development of Clair came hot on the heels of news from the operator that it had clinched a deal with the Magnus, Foinaven, Schiehallion, and Loyal field co-venturers, and the Sullom Voe terminal owners, to go ahead with its "highly innovative" Magnus Enhanced Oil Recovery (EOR) project.
The operator's idea is to take gas currently being reinjected into its Foinaven, Schiehallion, and Loyal deepwater West of Shetland fields to the Sullom Voe terminal, where the gas will be employed to displace liquid fuels being used in power generation. Remaining gas will be enriched with NGL at the terminal before being transported to Magnus, the NGL-gas mixture being injected into the Magnus reservoir to help boost production and total recoverable reserves from the UK's most northerly field.
Agreements with more than 30 North Sea oil companies with shares in the four fields, the terminal, and the two pipeline systems involved�the Northern Leg Gas Pipeline and Far North Liquids and Associated Gas System�were needed to move the Magnus EOR project ahead.
Through the $500 million scheme BP hopes to increase Magnus's oil reserves by some 50 million bbl, while pushing back the end of its field life to "several years beyond 2015," as well as "substantially" curbing CO2 emissions at the field by reducing flaring. Magnus, located in 186 m of water, first came onstream in 1984 and is flowing at a rate of around 70,000 b/d.
Speaking in Aberdeen last week on the 25th anniversary of BP's veteran Forties field, company Chief Executive John Browne said plans for Clair and Magnus were part of a longer-term strategy aimed at driving up BP's production on the UKCS from its current level of around 800,000 b/d.
UK Energy Minister Helen Liddell welcomed BP's announcements, saying the oil company's new investment was "timely, coming in the wake of other significant announcements heralding more activity in the North Sea."
"The [UK] oil and gas industry is entering a new phase, one which has been foreseen and prepared for," suggested Liddell. "Eighteen months ago the prospects for the North Sea seemed bleak, but a new spirit of cooperation between government and industry, and between large and powerful companies and smaller, more vulnerable enterprises, has come out of it."