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Shell's Penguin redevelopment to create hundreds of North Sea jobs



Shell has this week announced a final investment decision (FID) on the redevelopment of the Penguins oil and gas field- a move that will create “hundreds of jobs”.

Steve Phimister, Shell’s vice president for upstream UK and Ireland, said the construction phase would create work for ‘300 to 400 people’, with the majority of these jobs located in the north-east of Scotland.

The project will see the construction of a floating production, storage and offloading (FPSO) vessel, the first new manned installation for Shell in the northern North Sea in almost 30 years. The FPSO is expected to have a peak production of around 45,000 barrels of oil equivalent per day, according to Shell. Between 50 and 70 people are likely to work on board the new vessel once it is up and running.
The design for the Penguins field FPSO.
(The design for the Penguins field FPSO. Image via Sevan Marine).

The redevelopment of the Penguins field is an attractive opportunity with a competitive go-forward break-even price below $40 per barrel.

The Penguins field currently processes oil and gas using four existing drill centres tied back to the Brent Charlie platform. The redevelopment of the field, required when Brent Charlie ceases production will see an additional eight wells drilled, which will be tied back to the new FPSO vessel. Natural gas will be exported through the tie-in of existing subsea facilities and additional pipeline infrastructure.

The announcement demonstrates a renewed commitment by Shell to North Sea production. A commitment confirmed by Steve Phimister, vice president for upstream in the UK and Ireland, when he said:

“Shell has had a strong presence in this part of the northern North Sea for more than forty years. Having reshaped our portfolio over the last twelve months, we now plan to grow our North Sea production through our core production assets. In doing so, we will continue to work with the UK government, our partners and the regulator to maximise the economic recovery in one of Shell’s heartlands.”

The Penguins field is in 165 metres (541 feet) of water, approximately 150 miles north east of the Shetland Islands. Discovered in 1974, the field was first developed in 2002 and is a joint venture between Shell and ExxonMobil.

Industry representatives have warmly welcomed the announcement, with Oil & Gas UK chief executive Deirdre Michie saying:

“This is great news and an exciting start to the new year.”

“A global leader like Shell making a commitment on this scale demonstrates the investment potential the UK Continental Shelf still holds. It also shows the importance of the efficiency improvements our industry has delivered which have helped make redevelopment projects like this commercially viable.”

“We are hopefully entering a more positive phase for our industry in the UK with new projects on the horizon that I hope will bring a much-needed boost for companies in the supply chain.”

With further high value projects set to move forward to sanction this year, 2018 is shaping up to be a positive year for the North Sea Oil & Gas industry.

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Tags: Oil & Gas
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Shell's Penguin redevelopment to create hundreds of North Sea jobs - Time to read 3 min
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