The UK Chancellor of the Exchequer, George Osborne MP, outlined the change during the Government’s Autumn Statement. The allowance is designed to support the creation of a cluster area around a core oil and gas field, enabling development and encouraging exploration and future production activity in the surrounding region. The Maersk Oil-operated Culzean development, in Block 22/25 of the UK Central North Sea is likely to be the first project to receive the new allowance. If successfully developed, it could provide around 5% of the UK’s total gas consumption by 2020/21. First gas from the project is currently expected in 2019, subject to a final investment decision in 2015.
Jakob Thomasen, Maersk Oil CEO said, “Today’s announcement demonstrates the Wood Report in action, delivered through meaningful engagement between industry and government. The allowance supports Culzean’s development - an important contributor to the UK’s future energy security - and also the potential creation of a new development cluster in the surrounding region. The design of the allowance can undoubtedly play a part in continuing to encourage companies such as Maersk Oil and its co-venturers to maximise recovery from the UK continental shelf.”
Key facts on Culzean
- Culzean is a uHP/HT field. Maersk Oil UK (49.99%) is the operator, with JX Nippon (34.01%) and Britoil (BP) (16%) its co-venturers.
- Forecast plateau production is in a range of 400-500 million standard cubic feet per day (this represents Maersk Oil equity production of 30-45,000 boepd).
- The accommodation platform will have capacity for over 100 people.
- The water depth is approximately 88 metres and the reservoir is located around 4300 metres below sea level.