EMERALD OIL FIELD ON PRODUCTION IN NORTH SEA

Midland & Scottish Energy Ltd. (MSE) has placed Emerald oil field on stream in the U.K. North Sea with a floating production unit.

Initial production, from two satellite wells, will be used to commission facilities. Three water injection wells have been unplugged and are ready for start-up.

MSE will place a central cluster of wells-five producers and one water injector-on stream during the next few weeks. Production will build to an expected 25,000 b/d from 35 million bbl of reserves.

Field development has undergone an unusually large number of setbacks and changes.

DELAYS

MSE parent, Midland & Scottish Resources Ltd. (MSR), Aberdeen, chartered the Emerald Producer floating production unit from Trafalgar House Offshore & Structural Ltd., London, on a bareboat charter at $65,000/day for the life of the field.

Delays first cropped up during conversion of the Ali Baba semisubmersible drilling rig into a floating production unit by Davy Offshore (Dundee) Ltd.

Emerald production was supposed to start in first quarter 1991, but MSR became convinced that Davy could not complete the conversion in time and moved the rig to another yard.

The vessel reached the field in September 1991, leaving MSR hopeful of production by yearend. Trafalgar House, meanwhile, had taken over Davy. Legal wrangles followed, delaying start-up still further.

INTEREST PURCHASES

MSE very recently bought Sovereign Oil & Gas plc's 30% interest in the field. At the same time, MSE bought a 14% share from DNO Offshore Ltd. and 10.5% from DSM Energy Ltd., making it operator and boosting its interest to 98%.

Sovereign's parent, Neste Production Ltd., in turn a subsidiary of Finnish state oil company Neste Oy, still has a major interest in the field's future, having bought all its production.

Commenting on the asset sale, Peter Youngs, managing director of Sovereign, said, "Neste was aware at the time of its acquisition of Sovereign that there were practical difficulties inherent in the arrangement between MSR and Sovereign. Evaluation has indicated that the involvement of MSR and Sovereign as field partners is an unacceptable burden on the economics of the field."

MSR Chairman Martyn Deaner said, "We are pleased that all the contractual difficulties encountered during the the development phase are resolved and the group now has direct control of all aspects of production from the field."