Thursday, August 11, 2011
The Herald
by Mark Williamson
The head of BP's North Sea business said the oil and gas giant expects to approve three more huge projects off Scotland this year despite the Budget's tax hike.
Trevor Garlick said BP expects to proceed with projects involving an outlay of billions of dollars within months, subject to winning Government approval.
The plans represent a huge vote of confidence in the mature province by BP, which expects to recruit hundreds of skilled staff to keep pace with increased activity in the North Sea.
Last month the firm confirmed it would proceed with the pound(s) 3 billion redevelopment of the giant Schiehallion field west of Shetland with partners. The field contains much more oil than originally expected.
The projects that Mr. Garlick expects to confirm include a plan to develop a new area of the huge Clair field west of Shetland. This could be on the same scale as the Schiehallion project.
BP expects to invest around $1B (pound(s) 610MM) each in developments on the Kinnoull oil field and the Devenick gas field, in the Central and Northern North Sea respectively.
Mr. Garlick said the oil and gas firms partnering BP on each of the schemes have given their approval, although final agreements have not been written. He believes there could be plenty of money to be made in the North Sea for years.
"People are ill-informed when they talk about this area being over," said Mr. Garlick, noting that there could be billions of barrels oil equivalent still to be recovered.
Mr. Garlick said BP could make big returns by boosting recovery rates on its extensive acreage and making the most of the huge network of production facilities it has in the North Sea. His responsibilities include the Norwegian North Sea.
Advances in technology, combined with the increase in oil prices in the last two years, have transformed the economics of some fields.
Mr. Garlick discounted the effect of the recent fall in crude prices, saying BP made decisions based on long-term expectations.
"Most predict supply and demand will keep the price reasonably high," he said.
Noting that the tax regime can have a big influence on investment decisions, Mr. Garlick said the changes in North Sea taxes in the Budget were unhelpful.
The 12 percentage point increase in tax rates will reduce returns from all projects. "Some of the fields that we are looking at will be even more marginal, a couple look more difficult," he said. But BP has not scrapped any projects as a result of the tax increase.
Mr. Garlick said BP is investing at record rates in the North Sea. The company is recruiting to help it grow. It plans to hire around 300 skilled workers this year for the North Sea business and the same again in 2012.
Some 3500 BP and agency staff work on its North Sea operations currently. BP's proposals will boost the Government's claims that the tax increase is likely to have only a marginal impact on investment in the province.
The industry body Oil & Gas UK has warned that the hike could threaten billions of pounds of investment in the North Sea.
It said concessions granted by the Government last month, intended to encourage investment, did not go far enough.
However, Mr. Garlick, a board member of Oil and Gas UK, said the industry wants limited changes. He said Oil and Gas UK is lobbying for stability in the fiscal regime. It wants further allowances for difficult fields and predictability about costs of decommissioning assets.
Copyright (c) 2011 The Herald. via ProQuest Information and Learning Company; All Rights Reserved
Oil & Gas Post
Promote Your Page Too
LINK
No comments:
Post a Comment