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BP halts production at oldest West of Shetland oil facility Foinaven on asset decline

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BP halts production at oldest West of Shetland oil facility Foinaven on asset decline

Highlights

Change of plan as floating production facility to be retired

BP suffering output setbacks at flagship West of Shetland fields

Possible 200 million barrels still remain at Foinaven

London — BP has halted production at its oldest West of Shetland oil facility, Foinaven, citing the age of the facility and operational challenges, as several BP facilities in the region suffer output setbacks.

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In a statement issued April 15, BP said it had suspended production in a change of plan for the Foinaven facility, having last year said it had reached a new agreement with service providers intended to ensure the long-term future of the field and the aging Petrojarl Foinaven floating production storage and offloading vessel.

Foinaven came on stream in 1997 and like West of Shetland flagships Clair and Schiehallion produced a relatively heavy crude. With an API gravity of 26.4, the crude could be loaded directly onto shuttle tankers from the facility.

However, production from the deepwater field dropped sharply again last year, to 12,000 b/d, far off its 2002 peak of 113,000 b/d.

BP said the field could still contain up to 200 million barrels of resources, which could still be extracted with further investment in alternative facilities, but the current facilities were no longer viable.

"Work had been underway to consider options to extend the life of the vessel out to 2025," BP said. "However, it has now been concluded that, due to its age and the demands of operating West of Shetland, even with material further investment the Petrojarl Foinaven is not the right vehicle to recover the remaining resources from the Foinaven fields."

BP North Sea senior vice president Emeka Emembolu said: "The Petrojarl Foinaven FPSO has been an icon in the North Sea, serving the first deep water development on the UK continental shelf and to the West of Shetland. Foinaven was the forerunner to our major Schiehallion and Clair developments which have helped establish the West of Shetland as a key strategic hub in BP's global portfolio. Retiring the long-serving FPSO is now the safest and most economical option at this point."

The decision "also provides an opportunity to set the fields up for safe, efficient and more sustainable oil and gas production in the future, in line with BP's and the North Sea region's commitment to continue delivering safe and reliable oil and gas while transitioning to a net zero integrated energy company," he said, without specifying whether BP would itself initiate further investment.

BP has suffered production setbacks at both Clair and Schiehallion, while also trying to trim its asset base in the conventional North Sea.

Schiehallion and Clair, located in a harsh maritime environment in the eastern Atlantic, have both undergone multibillion dollar upgrades in the last decade, with new production facilities installed in 2017 and 2018, respectively.

However, last month its then-privately owned partner Chrysaor noted in an annual report that both fields had encountered problems.

Schiehallion production, combined with output from the nearby Alligin and Loyal fields, briefly peaked at 106,000 b/d in December 2018, after the facilities were brought back on stream following redevelopment, but has since fallen by more than 25%, according to Oil & Gas Authority data, despite expectations of output reaching some 130,000 b/d.

Chrysaor in its report put Schiehallion production at 60,000 b/d of oil equivalent last year, based on the company's 10% stake and excluding the Alligin satellite. It said the efficiency of the production facility had improved, but "performance was recently impaired by problems with sand management challenges."

By comparison, production from the Clair complex has been relatively stable since its second development phase came on stream in 2018, with output totaling around 65,000 b/d in mid-December 2020, according to OGA data.

But that is still well below expectations, which were for the second phase, known as Clair Ridge, to achieve 120,000 b/d in its own right, according to an earlier BP statement.