Shell to redevelop Penguins field in UK North Sea

Shell has announced a final investment decision (FID) on the redevelopment of the Penguins oil and gas field in the UK North Sea. A new floating production, storage and offloading (FPSO) vessel will be constructed, the first new manned installation for Shell in the northern North Sea in almost 30 years. Discovered in 1974, the field was first developed in 2002 and is a joint venture between Shell (50% and operator) and ExxonMobil (50%).

‘The redevelopment is an attractive opportunity with a competitive go-forward breakeven price below $40/b,’ reports Shell. The FPSO is expected to have a peak production in the region of 45,000 boe/d.

The Penguins field currently processes oil and gas using four existing drill centres tied back to the Brent Charlie platform. The redevelopment of the field, required when Brent Charlie ceases production, will see an additional eight wells drilled, which will be tied back to the new FPSO vessel.

A joint venture-owned/Shell-operated Sevan 400 FPSO has been selected as the development option for the field. Oil will be transported via tanker to refineries and gas will be transported via the FLAGS pipeline to the St Fergus gas terminal in north-east Scotland.

Meanwhile, Shell completed the $150mn sale of the first phase of its Hong Kong and Macau LPG marketing business to DCC LPG at the close of December 2017. The company will continue to operate the LPG plant in Hong Kong, which is part of the second phase of the transaction and is subject to conditions including regulatory approvals. As part of the sale, Shell branded LPG products will continue to be available in Hong Kong and Macau via a long-term brand license agreement with DCC LPG.

Shell also recently announced that the agreement it signed with Dansk Olieselskab (DO) in September 2016 regarding the sale of Dansk Shell, which consists of the Fredericia refinery and local trading and supply activities, has terminated and the sale will not complete. The company also noted that the Group’s $30bn divestment programme ‘remains on track to complete in 2018, with deals worth $23bn completed, $2bn announced and $5bn in advanced progress.’

Artist’s impression of the Penguin field’s new FPSO

Photo: Shell