North Sea operators weigh options as Brent oil contributor Ninian to close

TotalEnergies said May 26 it was considering "various options" for transporting oil that feeds the UK's flagship Brent crude blend after plans were announced for the closure of the Ninian oil field and associated infrastructure used by various operators in the area.

Alberta-based Canadian Natural Resources announced its intention to halt Ninian operations in March 2023, heralding an end to one of the North Sea's most prolific oil fields and raising questions over the Ninian pipeline, one of two major pipelines used to send Brent-branded crude oil to the Sullom Voe terminal in the Shetland Islands for loading.

Ninian continues to produce for the time being, but its output has dwindled to 6,500 b/d on average in 2022, having reached peaks of several hundred thousand barrels a day in past decades.

"Planning for the cessation of production and ultimately decommissioning of the Ninian field is underway, but is still at an early stage," a CNR spokesperson said May 25.

However, the closure decision raises questions for other producers, mainly the French major TotalEnergies and mature oil field specialist EnQuest, which depend on the Ninian Central platform and 175 km Ninian pipeline as a conduit for getting oil to Sullom Voe.

"We are aware of this and are assessing various options for the continued export from our assets," a TotalEnergies spokesperson said, declining to elaborate.

Infrastructure flagship

Ninian has produced more than 1.2 billion barrels of crude and is one of a number of fields that supplemented output from the Brent oil field to make up the Brent blend, synonymous with North Sea production and the Dated Brent price benchmark.

Several East of Shetland fields continue to produce, using the Brent and Ninian pipelines and loading under the Brent brand name, even though the Brent field was closed by Shell in 2021.

Explaining its decision, CNR echoed the dissatisfaction of a number of North Sea operators at the UK business environment, which features a 75% headline tax rate on revenues following the introduction of an "energy profits levy" in 2022.

CNR cited "prevailing regulatory and economic conditions" and an "increasingly challenging commercial outlook in the UK," saying Ninian was no longer "economic."

With overall Brent loadings under 50,000 b/d in 2022, the largest single source is now the Magnus field, operated by independent EnQuest, while Total Energies' Alwyn North and Dunbar fields also use the Ninian facilities as a transport route.

EnQuest operates the Ninian pipeline, even though CNR is the majority owner with a 63.3% stake, while the UK independent also manages the Sullom Voe terminal.

The UAE's Taqa Energy is another significant contributor to Brent blend, but does not use the Ninian route.

Magnus question-mark

EnQuest declined to comment on the implications of the planned closure of Ninian, or whether it would consider buying out CNR's stake in the pipeline. Regulator the North Sea Transition Authority also declined to comment.

Magnus produced 16,500 b/d on average in the first four months of 2023, a 28% increase on year-earlier levels.

EnQuest has been working to increase production at Magnus through a variety of drilling and well remediation activities, while also working on a revamp of Sullom Voe to improve efficiency and add low-carbon activities such as carbon capture and storage.

Alongside CNR, a minority stake in Ninian is owned by Neo Energy, a Norwegian-owned private company.

The decline of grades such as Brent contributed to a decision by S&P Global Commodity Insights to add US crude WTI Midland to the Dated Brent benchmark from June 2023.

Platts, part of S&P Global Commodity Insights, assessed the Dated Brent benchmark at $75.57/b on May 25, down $2.03 on the day.