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Shell set to expand role at North Sea Shearwater hub

Highlights

Shell aiming for Shearwater revamp

Arran could add 7,000 b/d of oil output

Serica's Columbus to add more volumes

London — Shell is set to expand its role developing a cluster of North Sea gas and condensate fields near its Shearwater hub, after South Korea's Dana Petroleum was revealed Thursday to be selling its operating stake in the nearby Arran project.

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Shell announced in June plans to develop the Fram gas and condensate field, which will use the Shearwater facilities to feed liquids to the Forties pipeline and gas through the SEAL pipeline.

The announcement marked Shell's second North Sea investment decision of the year, the first being the Penguins field further to the north near the moribund Brent field.

Fram involves a relatively economical sub-sea tie-back system and is evidence that the North Sea has weathered the industry downturn thanks to new technology and cost-cutting, Shell has said.

On Thursday independent RockRose Energy said it was buying Dana Petroleum's 20.43% stake in another nearby project, Arran. However RockRose said it would not take over Dana's role as operator, and a source close to the deal said the new operator would be Shell, which holds 24%.

Shell has said it expects Shearwater to be producing around 17,000 b/d of condensate in 2022 with the inclusion of Fram, plus another producing field, Starling.

RockRose said the formal development plan for Arran would be filed next month, which should add to volumes transported through Shearwater; Arran is set to produce around 7,000 b/d of condensate and 3 MMcf/d of gas around 2021, according to Dana's environmental statement.

Waiting in the wings is the Columbus project, being developed by independent Serica Energy, which submitted its development plan in June. The plan involves linking Columbus to the new pipeline to be built from Arran to Shearwater, with production expected to peak at 40 MMcf/d of gas plus 1,500 b/d of condensate and natural gas liquids.

Shell declined to comment on its expected switch to become operator of Arran. However the move conforms with expectations that Shell aims to revamp Shearwater thanks to cost reductions, and despite a general exodus from the North Sea by the majors.

The high-pressure, high-temperature Shearwater field had to be shut in 2012 until 2015 due to well integrity issues unearthed following a gas leak at Total's nearby Elgin-Franklin complex.

Shell continues to rely for most of its UK production on the less developed West of Shetland area: principally the Schiehallion field, in which it holds a 45% stake, and the Clair field, which is undergoing a redevelopment and is due on stream at year-end, with Shell holding a 28% stake.

--Nick Coleman, nick.coleman@spglobal.com

--Edited by Gary Gentile, newsdesk@spglobal.com