BP Plc started a project in the U.K. North Sea that will restore production halted since 2013 and help double the company’s output in the area by the end of the decade.
BP and its partners budgeted 4.4 billion pounds ($5.7 billion) for the Quad 204 project, which involved building a new floating production and supply vessel and redeveloping the aging Schiehallion and Loyal fields. Output from Quad 204 will ramp up to 130,000 barrels of oil a day this year, the London-based company said in an emailed statement Monday.
The producer plans to double its U.K. North Sea output to 200,000 barrels of oil equivalent a day by 2020, the company said. Volumes from the region, one of the world’s most expensive areas for finding and extracting oil, have shrunk in the past decade as older fields deteriorated and exploration spending dropped with crude’s three-year decline. BP partner Royal Dutch Shell Plc said earlier this year that it was selling a majority of its North Sea positions.
Among those divestments, Shell agreed to reduce its interest in the Schiehallion field, where it owns a 55 percent stake, while BP has 33 percent and Siccar Point Energy 12 percent. Once the deal is completed, Shell will hold 45 percent.
The Schiehallion and Loyal fields stopped production in 2013 as the sites needed redevelopment, new wells, replacement of infrastructure on the sea bed and a new production vessel. The new ship, the Glen Loyal, is 36 percent owned by BP, which is the operator, 54 percent by Shell and 10 percent by Siccar Point. The partners intend to drill 20 new wells there.
BP’s shares rose as much as 0.8 percent and Shell’s B shares added as much as 0.7 percent in London trading, in line with the gain in the Stoxx Europe 600 Oil & Gas index.
Quad 204 is the third of seven new projects BP plans to start this year. The company will restore its total oil and natural-gas production to about 4 million barrels a day by the end of this decade, a level it was at before the disastrous Gulf of Mexico oil spill in 2010 forced it to sell a third of its assets, Chief Executive Officer Bob Dudley said May 17.