BP to pump £4.5bn into North Sea projects

The oil giant is keen to boost North Sea production in the wake of the Gulf of Mexico spill

A A A

BP vowed to maintain current levels of production in the North Sea until 2030 as the Government yesterday approved the group's £4.5bn plan to extend its key Clair oil field.

The Clair Ridge extension, based about 75km west of the Shetland Islands, is the biggest of four new projects for BP in the UK North Sea, which will represent a record level of annual investment by the company in the region over the next five years. As the lead operator in the four projects, BP will pay about 40 per cent of their £10bn combined cost.

Bob Dudley, BP's chief executive, said: "Although it began over 40 years ago, the story of the North Sea oil industry has a long way yet to run."

Mr Dudley said that total hydrocarbon production across the UK had halved in the last decade and now satisfies about 90 per cent of the country's oil demand and half its gas consumption.

However, he believes that the North Sea still represents a huge opportunity for the company, which the rising oil price has made increasingly attractive to extract.

BP has already produced about 5 billion barrels of oil and gas equivalent from the North Sea and has the potential to produce another 3 billion, he said. This would see the company maintaining its reduced level of production in the region at its current level of between 200,000 and 250,000 barrels a day until 2030. BP would like to continue producing oil in the North Sea until about 2050, albeit it in diminishing quantitites.

BP said that about half of the £10bn investment in the four North Sea projects would be spent in the UK, generating about 3,000 jobs in the country.

David Cameron welcomed the decision to approve the Clair oil field, which BP is operating with Shell, ConocoPhillips and Chevron. "It shows the confidence that there is to invest in the North Sea," he said.

The Clair Ridge extension is scheduled to begin its 40-year production run in 2016. It marks the second phase of development at the giant Clair field, which recent appraisals have confirmed to be Britain's "largest hydrocarbon resource". BP estimates that Clair contained 7 billion barrels of oil and gas when production began in 2005, although it will only be commercially viable to extract a portion of that.

BP is keen to boost its production in the wake of the Gulf of the Mexico oil spill and its unsuccessful attempt to forge an alliance with Russia's Rosneft that would have allowed it to explore for oil in the Arctic. Although it is not "game-changing", analysts back BP's decision to develop its North Sea operation.

Jason Gammel, an analyst at Macquarie, said: "This will be an important asset that will be a steady earner. The economics have improved with the rising oil price." The kind of heavy oil produced in the Clair field is typically cheaper than other grades of oil because of the extra costs associated with refining, Mr Gammel said.

The Clair field, which lies under about 140m of water, is separate from the North Uist, a deep-sea discovery 1,300m below sea level, which BP's contingency plans revealed has the potential to unleash the biggest oil spill in history.

Sport
The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Volunteer your expertise as Trustee for The Society of Experimental Biology

Unpaid Voluntary Position : Reach Volunteering: Promising volunteer Trustee op...

Email Designer

£30000 - £35000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Psychology Teacher

£110 - £130 per hour: Randstad Education Reading: Psychology Teacher needed fo...

Food Technology Teacher

£85 - £120 per day: Randstad Education Cheshire: Randstad Education are curren...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week