THE LARGEST UK GAS

The offshore development of the largest new field discovered in the UK North Sea for a decade has been approved by the UK Oil & Gas Authority. The Maersk Oil operated high pressure, high temperature (HPHT) Culzean field in the UK Central North Sea is expected to produce enough gas to meet 5% of total UK demand at peak production in 2020/21. Culzean is also the largest gas field sanctioned since East Brae in 1990.

Discovered in 2008 by Maersk Oil and its co-venturers, the gas condensate field has resources estimated at 250-300 million barrels of oil equivalent. Production is expected to start in 2019 and continue for at least 13 years, with plateau production of 60,000-90,000 barrels of oil equivalent per day.

Maersk Oil and its co-venturers, JX Nippon and BP (Britoil) are investing around £3bn (USD 4.5 bn) in the development, with more than 50% committed to investments in the UK. Over the projected life of the field, it's anticipated that £2.1bn (USD 3.3 bn) in operating expenditure will be spent in the UK domestic market. The Culzean field aligns with the UK's commitment to increased gas-fired electricity generation and is expected to support an estimated 6,000 UK jobs and create more than 400 direct jobs.

The Culzean development has benefited from the HPHT Cluster Area Allowance introduced by the UK Government as part of the 2015 Budget. The allowance supports the development of high pressure, high temperature projects - which typically have considerably higher capital costs - and encourages exploration and appraisal activity in the surrounding area or 'cluster'.

Welcoming today's announcement, Jakob Thomasen, CEO of Maersk Oil said, "Culzean is an important development for the UK and also for Maersk Oil and our co-venturers. We are pleased the field will support UK economic growth as well as extend understanding of HPHT development. Culzean is the latest in a series of large investments by Maersk Oil in the North Sea where we are active in Denmark, Norway and the UK – reflecting our commitment to the future of the North Sea region."

The Chancellor of the Exchequer, Rt Hon George Osborne MP said, "Today's announcement sends a clear signal that the North Sea is open for business. Already the UK's oil and gas industry supports hundreds of thousands of jobs across the country and this £3 billion investment comes on the back of massive government support for the sector. "Despite challenging times, this government has backed the oil and gas industry at every turn, introducing a vital package of support to help it to protect and create jobs.

Andy Samuel, Chief Executive of the Oil & Gas Authority said, "Maersk Oil and partners' £3 billion investment to develop the Culzean discovery is excellent news for the UK during a period when the decline in global oil prices has created difficult operating conditions for this critical sector of our economy. The Oil & Gas Authority has worked closely with Maersk Oil and HM Treasury on the development plans for the Culzean field, which will support many new contracts in the oil and gas supply chain across the UK."

pennenergy.com

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