Work resumes on Elgin North Sea drilling platform 50 weeks after gas leak evacuation
Monday 11 March 2013
The UK’s vast Elgin gas field in the North Sea has resumed production almost a year after a leak forced a major shutdown, French operator Total said today.
The renewed flow of gas from the field, which accounted for around 5% of the UK’s total oil and gas production before the accident, gives a timely boost to public finances and growth — but is unlikely to result in cheaper gas bills for long-suffering households.
Total, which operates the field 150 miles off Aberdeen and owns a 46.2% stake in it, battled for seven weeks to stop gas spewing into the atmosphere following the accident on March 25 last year. Total, whose shares are still below the level seen before the leak, estimates the closure of Elgin and the nearly Franklin field cost it around £1 million a day.
The French giant is now set to resume production gradually at around 70,000 barrels of oil equivalent a day, around half of Elgin’s estimated output. It will take until 2015 to get production back to levels seen before the leak, while more stringent safety rules mean Total will have to plug a minimum of 10 wells over the next three years.
Gary Hornby, market analyst at energy broker Inenco, warned that households cranking up the heating in a bitterly cold winter should not expect any relief on bills as a result of the resumption in production.
He said: “Wholesale gas prices jumped by 1.5% on the day of the accident and are still around 15% higher than they were in June last year. Just because Elgin is back it doesn’t mean that gas prices are suddenly going to fall off a cliff. With the cold winter weather, gas demand has been way above average and we’ve also had outages in Norway, which means that we have had to take more gas out of storage. This will have to be replaced, pushing up prices in the summer.”
Japanese demand is also pushing up the price of natural gas after the nation shut down its nuclear power stations following its devastating tsunami two years ago, Hornby added.
The sheer size of the Elgin field meant its closure knocked an estimated 0.2 percentage points off the UK economy last year. Corporation tax revenues are also £3.6 billion down on last year for the first 10 months of the year, partly as a result. ING Bank economist James Knightley said the resumption was “good news on growth and the public finances for the Chancellor ahead of next week’s Budget.” The leak, which forced the evacuation of 238 workers, is thought to have been caused by pipe corrosion because of a reaction between chemicals in the drilling fluid and grease in the pipework, exacerbated by heat and high pressure.
Threat of 'catastrophic cascade of collisions' involving 300,000 pieces of rubbish must be averted, warn scientists
Oxford is the least affordable city in the UK, where houses cost 11 times local salaries
Swarm of killer bees sting woman 1,000 times
Malaysia Airlines Flight MH370: Oil slicks in South China Sea ‘not from missing jet’, officials say
Steve Irwin’s final words: Cameraman present at death opens up about deadly stingray attack for the first time
Oscar Pistorius trial: Athlete repeatedly throws up as court hears 'graphic details' of Reeva Steenkamp's autopsy
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
- 1 Oxford is the least affordable city in the UK, where houses cost 11 times local salaries
- 2 Australian man Rod Sommerville reacts to bite from deadly snake by reaching for cold beer
- 3 North Korea elections: Kim Jong-un wins 100% of the vote
- 4 David Cameron resorts to paying for Facebook fans because not enough people like him
iJobs Money & Business
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£55000 - £70000 per annum + benefits: Pro-Recruitment Group: In-House Corporat...
£80000 - £100000 per annum + benefits: Pro-Recruitment Group: In-House Opportu...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...