Competition in the U.K. gas industry has reached a new milestone with sale of the entire output of associated gas from Amerada Hess Ltd.'s Scott oil field to Mobil Gas Marketing Ltd.
It is the first time that the entire gas reserves of a field have been sold to a single marketing organization other than British Gas plc.
Amerada Hess and the other six Scott partners have signed letters of intent with Mobil.
BRITISH GAS TARIFF
Another sign of change in the U.K. gas market came when regulatory officials told BG to rethink price increases to industrial customers designed to stop the deliberate wasting of gas.
British Gas had imposed a new tariff in an attempt to eliminate deliberate waste of gas by some customers so that overall consumption exceeded the trigger point for cheaper tariffs available to bigger consumers.
James McKinnon, director general of Ofgas, said this solution to the flaring problem had imposed unnecessarily high price increases on about 20,000 customers.
If British Gas ignores the regulator's request, the price increases could be referred to the Monopolies and Mergers Commission for final arbitration.
Although competition is growing, British Gas still dominates the U.K. market. Ofgas has taken action on a number of occasions to ensure that the dominant position built during the days of state control are not misused now that the company is in the private sector.
SCOTT DEVELOPMENT
Scott, with 450 million bbl of oil reserves, is the biggest oil field currently under development in the U.K. North Sea.
Associated gas production will start in early 1994 and peak at 90 MMcfd.
It will be transported through the Mobil-operated SAGE gas line to St. Fergus, Scotland.
From St. Fergus, Mobil plans to distribute the gas using the BG distribution network.
Rex Gaisford, director of projects for Amerada Hess, said sale of this quantity of gas was a sign that competition within the U.K. natural gas market is beginning to work.
The fact that associated gas from a major oil field, as opposed to supplies from a dry gas field, can be successfully negotiated, demonstrates the buoyancy of this market for the future, he added.
Partners in the Scott project with Amerada Hess are Deminex U.K. Oil & Gas Ltd., Amoco (U.K.) Exploration Co., Enterprise Oil plc, Mobil North Sea Ltd., Kerr-McGee Oil (U.K.) plc, and Pict Petroleum plc.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.