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Equinor starts up Mariner heavy oil production in UK North Sea

Highlights

Plateau output level to be 55,000 b/d, peak of 70,000 b/d

First operated UK oil production for Equinor

Adds to growing UK heavy oil production

London — Norway's Equinor has started production from the Mariner heavy oil field in the UK North Sea, which is set to produce for over 30 years and add to growing production of heavy and ultra-heavy oil in UK waters.

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In a statement, Equinor said Mariner, which lies 150 kilometers east of the Shetland Islands, should produce atan annual plateau rate of 55,000 b/d, and peak rates of 70,000 b/d. The oil will be loaded directly onto tankers from a floating storage unit.

Equinor said it was counting on the field to produce over 300 million barrels over 30 years, but noted the field holds up to 3 billion barrels of "in place" oil, and the recovery estimate had already been increased by 20%.

With an API gravity of 15.1, Mariner crude will be among the heaviest produced in the North Sea, alongside thatfrom the EnQuest-operated Kraken field, which came on stream in 2017 and has an API gravity of 14. Kraken produced around 33,000 b/d in March and April and has been selling to numerous buyers, according to EnQuest.

Mariner production entails using electrical submersible pumps and a condensate diluent to ensure the flow of oil. The crude has a higher sulfur content, of 1.1%, compared with 0.7% for Kraken.

With an estimated price tag of $7.7 billion, Equinor said it had brought down the project cost by optimizing its design since the original investment decision in 2012.

"By gathering and interpreting new seismic data we have improved our understanding of the reservoirs. This has resulted in fewer and better-placed wells and increased resources since the project was sanctioned," Equinor executive vice president for technology, projects and drilling Anders Opedal said.

Mariner was first discovered in 1981 but was long ignored due to its complexity, until Equinor took over as operator in 2007 and started to develop solutions, the company said.

Early production will be from five wells, but as many as 100 could be drilled over the field's lifetime. Equinor also plans another heavy oil project nearby known as Cadet, using the same facilities, with start-up expectedin 2026.

"We see clear potential to further increase the oil recovery from the Mariner field and will proactively seek opportunities to do so through the application of new technology, additional drilling and future tie-back opportunities," Opedal said.

Equinor holds a 65.1% stake in Mariner, alongside conglomerate JX Nippon on 20%, UK independent Siccar Point Energy on 8.89%, and privately owned Dutch company ONE-Dyas with 6%.

UK REVIVAL

Mariner could help extend a revival in UK oil output.

Production is up about 30% from five years ago, at around 1.2 million b/d, thanks partly to investments approved before the oil price crash, along with cost-cutting, new technological solutions and a regulatory overhaul.

However, production prospects look less certain into the 2020s, when output is expected to decline.

Mariner is the first UK oil field to go into production with Equinor as operator. The Norwegian state-controlled company has several other UK projects underway.

"The start-up of Mariner, the first Equinor-operated oil field on the UK continental shelf, establishes our foothold in the UK and reinforces our commitment to be a long-term energy partner," Equinor senior vice president forthe UK and Ireland Hedda Felin said.

Related story: Norway-UK Utgard startup to boost Gudrun oil output

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

-- Edited by Daniel Lalor, daniel.lalor@spglobal.com