Norwegian oil giant Equinor has announced its commitment to developing UK Continental Shelf (UKCS) oil and gas projects, despite plans for the UK to leave the European Union.
The company has a stake in more than 20 exploration licences in the region, and has plans to drill three more wells in the UKCS in 2019.
Equinor executive vice-president for strategy Al Cook told Reuters: “We are putting more investments into the UK despite Brexit, the perception of North Sea as being very mature and dying and oil price gyrations. We want to make the most out of UK’s common geology with Norway.”
Recent UKCS oil and gas projects undertaken by Equinor include a 40% stake Rosebank oil and gas field off the Shetland Islands, which the company acquired from Chevron in October, and the Mariner heavy oilfield in the North Sea that is expected to produce oil in the first half of 2019.
On Monday, Equinor said it completed a deal, announced in May, to sell a 17% interest in the Alba oilfield off the coast of Aberdeen to Verus Petroleum to focus on projects such as Rosebank and Mariner. Chevron is the operator with a 23.37% stake in the Alba field.
A final investment decision will be made jointly with Scottish firm SSE on the Dogger Bank offshore wind farm next year.
Potential impact of Brexit on UKCS oil and gas
On Monday, UK Prime Minister Theresa May announced she was pulling the parliamentary vote on the Brexit deal, which will hinder the process, as the possibility of a no-deal Brexit grows. The Prime Minister will face a vote of confidence over her leadership this evening, after growing pressure from MPs over Brexit.
Asked what the likely impact of a hard Brexit will be on the UK offshore oil and gas industry, Browne Jacobson LLP partner Selina Hinchliffe told Offshore Technology: “There is growing uncertainty in whether there will be a Brexit deal or no deal at all, exacerbated with the recent pulling of the parliamentary vote.
“However, if we look to market participants and demand, this uncertainty is not reflected. Equinor has recently suggested that they will continue to invest in the UK despite Brexit because of the connected UK/Norway geology; this in turn helps promote long-term legal certainty.
“The UK is heavily reliant of UKCS with 43% of its gas supply deriving from the North Sea and the North Irish Sea. If the UK is to break away from the EU on the basis of a ‘no deal Brexit’, it is possible that the UK Government will look to utilise and promote the UKCS, which may ensure market buoyancy as a result of keeping funds within the UK and avoiding potential tariff barriers that may be created on EU gas interconnectors.”
Equinor said it has the capacity to supply the UK with 25% of its peak gas demand, while energy generated from its Sheringham Shoal and Dudgeon wind farms will be able to power 630,000 UK households.
The company is hoping to apply its knowledge working in the Norwegian continental shelf, where Equinor has cut breakeven costs for new projects and increased the recovery rate of oil-producing fields.