Global energy company Statoil ASA (STO) is to delay investment in the Bressay heavy-oil field in the U.K. sector of the North Sea, in a setback to its development plans.
Global energy company Statoil ASA (STO) is to delay investment in the
Bressay heavy-oil field in the
U.K.
sector of the
North Sea
, in a setback to its
development plans.
"Statoil has decided to reconsider the concept and delay the field's
development decision," said Statoil spokesman Knut Rostad, adding it was
acting with license partner Royal Dutch Shell PLC (RDSA).
The technically challenging project was estimated to cost between $6 billion
and $7 billion, and would be one of the largest investments in the
U.K.
part
of the
North Sea
in decades.
Earlier this year, the Norwegian company received
U.K.
consent to develop the nearby $7 billion Mariner heavy-oil field, and stressed
the project was moving forward as planned.
Mariner and Bressay are the largest, most important Statoil-operated projects
outside of
Norway
, and
are also among its most challenging projects.
Statoil expected Bressay to come on stream in 2018, but has decided to review
the project after receiving new data, said the company.
"The interpretation of extended well test data from the nearby Bentley
field, which is a close analogue to Bressay, has given positive indication that
there is potential to simplify the concept and investigate alternative
development solutions," Mr. Rostad said.
The decision comes at a critical time when higher costs have reduced cash flow
in the global oil sector, dampening investment growth. Independent consultancy
Rystad Energy has forecast global oil and gas investments to grow less than 4%
a year in 2013 and 2014, from 12% a year in the 2010 to 2012 period.
Asked whether simplifying Bressay would also make it cheaper, Mr. Rostad said
"we want to investigate the potential to make it more cost
effective."
One of the four Bressay licenses is due to expire in July 2014 and Statoil is
in talks with the U.K. Department of Energy and Climate Change about an
extension, Mr. Rostad said.
Bressay was originally discovered in 1976, but its oil has a higher viscosity
than the Mariner field which means that more expensive methods are required for
its extraction. The field is expected to hold 200 million to 300 million
barrels of recoverable oil.
Statoil is the operator of Bressay with a 81.625% stake, while Shell holds the
remaining stake.
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