EnQuest PLC, the largest independent oil company in the UK, says it is investing £4 billion ($6.45 billion) in the North Sea’s Kraken oil field development.
The Department of Energy and Climate Change (DECC) has approved the development, said to be the largest in the UK North Sea this year.
EnQuest, the operator of Kraken, says it will develop the oil field project on behalf of itself and its partners. This will be the company’s sixth UK North Sea production hub.
The development involves two separate heavy oil fields, “both of which will benefit from heavy oil allowances, which the Government has provided support for in order to stimulate investment in the UK North Sea,” EnQuest wrote in a communiqué.
Most of the investment spent in UK, says EnQuest
Eighty percent of the £4 billion will be spent in the United Kingdom, creating approximately 20,000 jobs while the project is being constructed and about 1,000 operational jobs per year upon completion.
There will also be an impact on jobs for engineering, drilling and other supplier companies that will be working with EnQuest.
According to the UK Treasury, “The investment was made possible by government tax relief through the ultra heavy oil field allowance which allows companies to claim tax relief on up to £800m of their profits. EnQuest are investing in two heavy oil fields, and so will be entitled to an allowance for each.”
George Osborne, UK Chancellor of the Exchequer, said:
”This is a big investment that will create jobs and boost the British economic plan. It is also evidence that our efforts to create a competitive tax regime that gets the most oil and gas out of the North Sea are working.”
Over its 25-year life, the North Sea’s Kraken oil field development is forecast to produce about 137 million barrels of oil.
According to EnQuest, oil production will start in 2016/2017. Gross peak oil production is forecast to exceed 50,000 barrels per day.
Amjad Bseisu, EnQuest CEO, said:
“Companies like EnQuest are the future of the North Sea; it is only by combining our skills and expertise with fiscal incentives, such as heavy oil allowances, that really substantial projects like Kraken are possible. Kraken is a transformational project for EnQuest and we are delighted to be able to proceed with it; working with the Government and our partners to maximise the extraction of approximately 140 million barrels of oil in this field, over its 25 year long life.”
“EnQuest extends the lives of mature oil fields and brings to life previously undeveloped oil fields, using the integrated technical skills of our people and our significant operational scale as the largest independent North Sea producer.”
About EnQuest PLC
EnQuest PLC was created in April 2010. It is a combination of the demerged British North Sea assets of Lundin Petroleum and Petrofac.
EnQuest operates in the UK Continental Shelf and also has assets in Malaysia. Its shares are quoted in the London Stock Exchange. It also holds a secondary listing on Nasdaq OMX Stockholm.
The company has interests in six oil fields in the North Sea. The Don Southwest and West Don fields used to form the business unit of Petrofac – the two oil fields have a combined production of 40,000 barrels per day.
EnQuest also has interests in the Deveron, Thistle, Heather and Broom fields, which together produce 24,000 barrels of oil per day.