Shell gives green light for revival of Penguins field in North Sea

Royal Dutch Shell has given the go-ahead for its first new manned oil and gas rig in the northern North Sea in almost 30 years, as it redevelops the Penguins oil and gas field.

Shell, as operator, has kicked off the process of constructing a floating production, storage and offloading vessel as it sees an "attractive opportunity" from the project of a break-even price below $40 per barrel, with the vessel expected to have a peak production of around 45,000 barrels of oil equivalent per day.

Redevelopment, which is required as the current Brent Charlie platform ceases production, will see eight new wells drilled, which will be tied back to the new FPSO vessel, with natural gas exported via existing subsea facilities and some new pipeline infrastructure. The Penguins field, where ExxonMobil is a 50% partner, is located 150 miles north east of the Shetland Islands where the water 165 metres of water, which would classify this as a deep water project.

"Having reshaped our portfolio over the last twelve months, we now plan to grow our North Sea production through our core production assets," said Steve Phimister, Shell's vice president for upstream in the UK and Ireland.

"In doing so, we will continue to work with the UK government, our partners and the regulator to maximise the economic recovery in one of Shell’s heartlands.”

A Sevan 400 vessel will be owned by the joint venture with Exxon and operated by Shell. 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.