Shell adds momentum to UK investment revival

The UK's oil and natural gas sector continues to enjoy a bumper year for new project commitments, with Shell adding to the tally of upstream final investment decisions (FIDs).

The firm has agreed to go ahead with the development of the Arran gas and condensate field in the UK central North Sea, which was originally discovered in 1985. Arran will be developed as a tie-back to Shell's Shearwater platform, with production peaking at around 100mn ft³/d (1.03bn m³/yr) of gas and 4,000 b/d of condensate.

Shell expects first gas in 2021 but it has not disclosed a cost estimate. It has taken over as operator of Arran from Dutch firm Dyas, which holds a 25pc stake in the project. Shell holds 44.57pc and London-listed RockRose Energy, which recently acquired Dyas' portfolio in the Netherlands, owns the remaining 30.43pc.

Arran brings the total number of UK upstream FIDs to at least seven this year, up from just two in 2017. Shell is involved in four of the new projects, which will help the company rebuild its UK portfolio after it sold $3bn worth of upstream assets in the country last year.

"This is the fourth FID announcement in the UK North Sea in 2018, which will result in further production growth for Shell following the decision to redevelop the Penguins field in the northern North Sea, the Alligin field west of Shetland and the Fram field in the central North Sea," the firm said today.

Shell produced over 200,000 b/d of oil equivalent (boe/d) in the UK last year. Its output this year has been hit hard by the sale of over 100,000 boe/d of assets to private equity-backed Chrysaor in November 2017.