Maersk Oil has reduced the capital costs of its Culzean high-pressure, high-temperature (HPHT) gas project in the UK Central North Sea by $500m.
The company operates the project with a 49.99% interest and currently forecasts investment costs for the project to be around $4bn.
This forecast has been achieved through upfront design and project planning, supply chain deflation and supportive foreign exchange movements.
Maersk Oil CEO Gretchen Watkins said: “This updated forecast reflects Maersk Oil’s commitment to world class project execution and our aim to continually improve our major capital projects, together with our partners and suppliers.
“Achieving cost reduction of 11% during project maturation, we are showing our ability to deliver greater value for investors and stakeholders through effective project delivery and controls.
“Together with our position in the Statoil-operated Johan Sverdrup field development, Maersk Oil is committed to delivering the next generation of significant North Sea developments.”
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Maersk stated that it achieved a significant improvement of project CAPEX in collaboration with partners, suppliers and authorities.
The breakeven estimate for the project stands at $33 per barrel of oil equivalent (boe) at present.
The Oil & Gas Authority approved Culzean development in August last year.
Since then, Maersk Oil and co-venturers BP (32%) and JX Nippon (18.01%) have worked together and with suppliers to improve the project.
The first production from Culzean project is expected in 2019. Discovered in 2008, the field is set to produce enough gas to meet 5% of total UK demand at peak production in 2020-21.
Image: The Culzean HPHT gas project is located in the UK Central North Sea. Photo: © AP Moller – Maersk Group.