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Biggest North Sea oil find in decades to be drilled for first time

north sea

Jonathan Leake

Tue, Apr 9, 2024, 11:57 AM 4 min read

In This Article:

A UK energy company is to start drilling at the biggest oil field discovered in the North Sea in at least 20 years in spite of a net zero crackdown on the industry.

EnQuest plans to bring two fields onstream which have the potential to produce 500 million barrels of crude oil over coming decades.

The sites, which neighbour Kraken oil and gas field, 80 miles east of Shetland, will reignite the political battle over the North Sea’s future in which Labour has threatened to block new production citing environmental concerns.

Their planned intervention has prompted warnings from energy companies that the UK risks cutting off its own energy supplies before it has a replacement.

The resulting “Kraken cluster” will have combined reserves larger than either Rosebank or Cambo, the controversial fields west of Shetland which attracted a backlash from environmental campaigners. Cambo was discovered in 2002 with discovery drilling at Rosebank taking place two years after.

Rosebank, which is predicted to yield 350 million barrels of oil, won a production licence last September after months of political wrangling. Cambo, with 170 million barrels of oil, has been in limbo since 2021 when energy giant Shell pulled out of the project because of the green backlash.

It comes as Labour plots a ￡11bn raid on the UK’s oil and gas industry as part of proposals to increase and extend the windfall tax, with the funds invested in “clean power to cut bills for families”.

The party has also proposed to ban new oil and gas drilling licences.

Energy companies are under intense pressure to cut back on oil and gas production and boost investment in renewables as governments race to meet net zero targets.

Wael Sawan, the chief executive of Shell, warned last month that the world is at risk of energy shortages unless more money is invested in drilling for oil and gas.

EnQuest’s two new sites, Bressay and Bentley, are so close to Kraken that they can all be connected to the same production system, based around the giant ship already serving as a floating oil platform for the Kraken field.

EnQuest said Bressay was “one of the largest undeveloped oil fields in the UK continental shelf” with so-called oil-in-place estimated to be between 600 million and one billion barrels.

Oil-in-place measures the total oil in a reservoir but the amount extracted from Bressay is likely to be around 200-300 million barrels.

Bentley, the second nearby field, is thought to be even larger, capable of producing more than 300 million barrels, putting it on a par with Rosebank.

Those amounts are in addition to the 137 million barrels already being extracted from the original Kraken field. It means the cluster could produce more than 700 million barrels of oil.

A spokesman for Offshore Energies UK, the industry trade body, said: “Continued investment in UK energy opportunities, including oil projects, is necessary to ensure UK security of energy supply, support hundreds of thousands of jobs and contribute to the UK economy.”

However, it is thought that almost all that oil is likely to be exported, partly because the Kraken field is not linked to a pipeline meaning its oil is likely to be collected by ship and taken to whichever refineries buy it.

It means the main benefit for the UK will come from any taxes paid by EnQuest. The windfall taxes imposed by Jeremy Hunt, the Chancellor, currently stand at 75pc of profits.

Craig Baxter, of EnQuest, said: “EnQuest continues to explore ways to progress the respective development of the Bressay and Bentley fields.

“EnQuest is committed to supporting the energy transition in the UK and any future field development will be conducted in line with EnQuest’s commitment to reaching net zero scope 1 and 2 emissions by 2040.”

Mr Baxter added that the gas initially extracted from the Bressay field would be used to power the Kraken operations, replacing the diesel fuels currently used and so cutting emissions.

He said: “This would significantly reduce Kraken’s emissions, by displacing diesel that is currently being used to power field operations.”

A Department for Energy Security and Net Zero spokesman said: “As data from the independent Climate Change Committee shows, we’ll still need oil and gas for decades to come, even when we reach net zero in 2050.

“That’s why we’re backing the UK’s oil and gas industry with annual licensing rounds, supporting around 200,000 jobs, generating billions in tax revenues to fund public services and support with the cost of living and retaining the skills and expertise needed for the green transition.

“Even with new oil and gas licences, we have been clear there will be a managed decline in UK production, projected at 7pc per year, and they will not make us a net exporter or increase carbon emissions above our legally binding carbon budgets.”

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