Maersk gets UK approval for $4.5-billion Culzean field development

COPENHAGEN, Denmark -- The development of the largest new field discovered in the UK North Sea for a decade has been approved by the UK Oil & Gas Authority.

The Maersk Oil-operated high pressure, high temperature (HPHT) Culzean field in the UK Central North Sea is expected to produce enough gas to meet 5% of total UK demand at peak production in 2020/21. Culzean is also the largest gas field sanctioned since East Brae in 1990.

Discovered in 2008 by Maersk Oil and its co-venturers, the gas condensate field has resources estimated at 250-300 MMboe. Production is expected to start in 2019 and continue for at least 13 years, with plateau production of 60,000-90,000 boed.

Maersk Oil and its co-venturers, JX Nippon and BP are investing around $4.5 billion (£3 billion) in the development, with more than 50% committed to investments in the UK. Over the projected life of the field, it’s anticipated that $3.3 billion in operating expenditure will be spent in the UK domestic market.

The Culzean development has benefited from the HPHT Cluster Area Allowance introduced by the UK Government as part of the 2015 Budget. The allowance supports the development of HPHT projects—which typically have considerably higher capital costs—and encourages exploration and appraisal activity in the surrounding area or ‘cluster’.

“Culzean is an important development for the UK and also for Maersk Oil and our co-venturers,” Jakob Thomasen, CEO of Maersk Oil, said. “We are pleased the field will support UK economic growth as well as extend understanding of HPHT development.”

Andy Samuel, chief executive of the Oil & Gas Authority, said, ”Maersk Oil and partners’ £3 billion investment to develop the Culzean discovery is excellent news for the UK during a period when the decline in global oil prices has created difficult operating conditions for this critical sector of our economy. The Oil & Gas Authority has worked closely with Maersk Oil and HM Treasury on the development plans for the Culzean field, which will support many new contracts in the oil and gas supply chain across the UK.”

“This investment by Maersk Oil and its co-venturers, in this technically demanding HPHT field, is very encouraging at this challenging time for the industry and reinforces the fact that that the UK Continental Shelf continues to have much to offer,” Deirdre Michie, chief executive of Oil & Gas UK, the nation’s offshore oil and gas industry association, said.