Total to drill new oil exploration well east of Shetland

Elisabeth Proust
Elisabeth Proust

French oil giant Total has brought more good news to a beleaguered North Sea oil industry after it announced plans to drill a new exploration well in the Sween field, 100 miles east of Shetland.

Total plans to start drilling in the third quarter at the prospect located near its Alwyn platform.

Drilling activity for new oil wells in the North Sea has fallen over the past 12 months to levels not seen since the 1970s as a result in the slump in crude oil prices from more than $110-barrel in Summer 2014 to around $30-barrel recently.

The exploration licence for the Sween prospect was awarded in December 2014 during the 28th Offshore Licensing Round by the Dept for Energy (DECC).

Elisabeth Proust, Managing Director, Total E&P UK, said: “It is a particularly challenging time for the offshore industry where every penny counts. Nevertheless, we will continue to look for opportunities to improve our position and thereby create value.

“In this context, I am pleased to be able to confirm Total’s commitment to continue exploring UK waters and am delighted that the Prime Minister, David Cameron, was been able to join us”.

Amber Rudd, the British Energy Minister, commented: “I welcome the news from Total that it will be drilling a new exploration well later this year.

“This shows the North Sea is open for business, and this Government is clear that the broad shoulders of the UK are firmly behind it”.

Meanwhle, following the large vote by Shell shareholders in favour of the merger with BG, shareholders in the latter have voted by an even larger majority today to accept the $50 bilion deal.

The BG vote was 99.53% in favour, with 0.47% against. BG was created in 1997 when British Gas split into two separate companies

Ben van Beurden, Chief Executive of Shell, commented: “I am very pleased that BG shareholders have voted in favour of the combination and look forward to welcoming them onto our register when the transaction closes.

“BG adds attractive deep water and integrated gas positions and will act as a catalyst for accelerating the re-shaping of our business. We now look forward delivering the benefits of the combination as quickly as possible following completion.”

The acquisition will boost Shell’s oil and gas production by 20% and bring it closer to challenging the world’s top international oil company ExxonMobil

Combined, Shell and BG will overtake Chevron as the world’s second-biggest publicly-traded oil and gas company measured by market value.

The combined company is also set to topple Exxon as the largest publicly-traded oil and gas producer by 2020, according to analysts at Simmons and Company.

Once the two companies merge, Shell will start a complex integration process that will include thousands of job cuts, tens of billions of dollars in asset sales and the harmonizing of the companies’ trading and production operations as they overlap in many parts of the world.

Shell has promised to find $3.5 billion from cost savings and overlaps by 2018, from various areas including its corporate, administrative and IT operations.

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