London — The North Sea oil industry can thrive despite the exit of the oil majors and the political upheaval of Brexit, Tony Durrant, the chief executive of leading independent Premier Oil, said in an interview with S&P Global Platts.
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Durrant's upbeat message came as the majors continue to exit the region. Chevron said last month it wanted to sell most of its North Sea assets. BP is selling its stakes in the Rhum, Bruce and Keith fields to Serica Energy, a deal complicated by Iran's 50%-ownership of Rhum.
Durrant however voiced enthusiasm particularly for the handover of infrastructure such as the Forties pipeline and Sullom Voe oil terminal, both formerly operated by BP.
BP sold Forties to petrochemicals company Ineos last year. Six weeks after the deal closed the pipeline had to be temporarily shut down when a crack was discovered.
Durrant said the majors had not seriously invested in the North Sea for some time, though he acknowledged they were putting money into the less-explored West of Shetland area.
"Over the next one-to-two years there will be more and more examples of the bigger companies in effect selling assets to mid-cap companies like ourselves for whom the UK is still very material, and there are many, many opportunities," he said, citing estimates of 20 billion barrels of oil equivalent remaining.
"It's not just frankly that the majors are selling, it's that over a period of time now, maybe as much as five years, they've not been actively investing."
"We see the opportunity to take on assets that the majors are really not investing in and still plenty of life in those assets," he said.
On the Forties pipeline he added: "I would have no qualms about Ineos and the way that they've operated the Forties Pipeline System."
Durrant stressed the opportunity to develop small oil and gas accumulations close to existing facilities, citing Premier's Tolmount project, a low-cost gas development in the southern North Sea, which could contain as much as a trillion cubic feet of gas once nearby resources are included.
Having started up the Catcher oil field in December, Tolmount is next on Premier's list for development. Its partner in the project, South Korea's Dana Petroleum, is expected to give its go-ahead soon.
In "the traditional oil producing areas of the UK North Sea it is tough because the exploration is very mature," Durrant said, highlighting "incremental reserves surrounding existing projects" as pivotal.
Durrant described as "fairly specific" strikes at Total's North Sea platforms and played down the likelihood of more generalized strike action, saying the strike related to an issue with the French major's takeover of Denmark's Maersk Oil, which had led to divergent contracts among workers. Premier holds stakes in several of the affected fields.
Durrant described as particularly welcome the arrival of specialist companies to operate legacy infrastructure; Kuwait's sovereign wealth fund announced a UK infrastructure purchase last month. Previous deals have included BP's 2015 sale of the CATS gas pipeline to Antin Infrastructure Partners.
Pipelines are still needed, even as the North Sea gradually transitions to floating facilities that can be more easily redeployed or decommissioned, Durrant said. The arrival of specialist infrastructure companies means "we can focus on development drilling, the addition of reserves, the sub-surface, which is our natural skill set," he said. "It's a very positive thing."
On Brexit, Durrant voiced confidence the UK could continue to export its oil industry excellence, much of it originating in the Piper Alpha oil platform disaster 30 years ago, which left 167 people dead and resulted in a major overhaul.
"The oil industry is relatively immune to Brexit. We are a dollar industry that's been very well established in the UK over many years. We have mostly dollar costs, we borrow in dollars. We don't have the foreign exchange exposure to euros."
"On the regulatory side frankly the UK North Sea invented safety cases and other regulatory regime elements. And we've given those to the rest of the world."
On the Falkland Islands, Durrant confirmed Premier's hopes of approving the Sea Lion oil project, thought to hold 520 million barrels of oil, next year. The project would effectively open a new oil province, something strongly opposed by Argentina's previous president Cristina Kirchner, who stood down in 2015, due to the sovereignty dispute over the islands with the UK.
However Durrant said this was less of an issue now. Premier is trying to raise funding for the project, which it estimates will cost $1.5 billion to get to "first oil," and hopes to finalize financing by year-end.
"There's been a noticeable change in the appetite of external investors -- equity, debt, banks etc -- for oil projects in the last 12 months, so we're pretty busy on that and remain hopeful," he said. "The reality is the relationship between the UK and Argentina has improved immeasurably."
"My impression is the Falklands is really not very high on the list of topics being discussed between the two governments. And that's fine with us because we'd just like to get on with the project."
--Nick Coleman, firstname.lastname@example.org
--Edited by Alisdair Bowles, email@example.com