Shell sees continued potential in UK West of Shetland fields: CEO

London — Shell is likely to remain committed to its North Sea assets, particularly in the West of Shetland area, as it looks to reshape its global portfolio in response to the recent market meltdown, CEO Ben van Beurden said July 30.

Unveiling its second quarter corporate results, Van Beurden voiced confidence in Shell's two main West of Shetland assets, the Clair and Schiehallion oil fields, both of which have been revamped in recent years and are operated by BP, with Shell holding stakes of 28% and 45%, respectively.

Shell is also a partner in another major West of Shetland project under consideration, the Cambo field, thought to hold over 800 million barrels of oil "in place."

"We are still very much committed to that area," Van Beurden said. "We see still a lot of potential in the West of Shetland area -- Clair, Schiehallion -- we see further running room there," he said in response to a question from S&P Global Platts.

"I don't want to get ahead of ourselves, but I would be surprised if we would conclude that that wouldn't be part of our portfolio going forward," he said, referring to the upcoming asset review.

UK oil output has been recovering since 2014, although it has dipped this year due to the operational impact of COVID-19, with production in the first five months down 5% at 1.11 million b/d, showed data published the same day as Shell's results. Output levels still remain less than half of the UK peak at the turn of the millennium, however.

Production from the Clair heavy oil field has been steadily rising since a second development phase, Clair Ridge, came on stream in 2018. Overall Clair production hit a peak of 75,000 b/d in February, according to UK regulator Oil & Gas Authority, or OGA.

The Schiehallion field has had patchier performance since it was brought back on stream in May 2017, with output peaking at 106,000 b/d in December 2018, but falling to 47,000 b/d by April this year.

Shell is also investing in several projects in the conventional North Sea, although it has experienced delays in recent months related to COVID-19. These include the creation of a new gas infrastructure hub known as Shearwater, and development of the Penguins oil field.

Efficiency improvements

Separately, the OGA said UK production efficiency had reached 80% in 2019, a five percentage point improvement on 2018 and a steady improvement from a nadir of 60% in 2012. Production efficiency is actual output as a percentage of the economically viable maximum. "2019 saw a 40% decrease in losses from unplanned shutdowns and a 26% reduction in losses from planned shutdowns," the OGA said.