The biggest gas field discovered in the North Sea for more than a decade has been given the green light to start production in a long-awaited boost for the beleaguered sector.
About quarter of a billion barrels of oil equivalent are believed to be located in the Culzean field off Shetland. It is expected to create more than 400 jobs, and support a further 6,000 across the UK.
The announcement provides some welcome respite for Scotland’s flagship North Sea industry, which has been left reeling from thousands of lay-offs in recent months as global oil prices nosedive.
But the SNP Government is warning that the problems in the sector may not be over without further action to help boost dwindling exploration levels.
At peak production in 2020-21 the Culzean field is expected to produce enough gas to meet half of Scotland’s needs.
Chancellor George Osborne welcomed the news on a visit to Scotland yesterday, insisting that the decision by the UK Oil & Gas Authority to approve exploitation of Culzean is a “clear signal that the North Sea is open for business”.
The field was discovered in 2008 and with an estimated reserve of 250 million-300 million barrels of oil equivalent it is described by Danish operator Maersk as the largest gas field sanctioned for exploitation since East Brae in 1990.
Gas is expected to started flowing from the development in 2019 and continue for at least 13 years, with peak production of 60,000-90,000 barrels per day.
Scotland’s energy minister Fergus Ewing said the development brings “welcome investment, jobs and supply chain opportunities”.
He added: “As the largest new field in a decade, it also demonstrates that there remain considerable opportunities to extend production for decades to come.”
But Mr Ewing warned that the UK Government must take action to encourage firms to search for further oil and gas finds in the North Sea.
It follows a keynote report by oil and gas tycoon Sir Ian Wood last year which said this would be crucial to secure the future of the North Sea.
Mr Ewing said: “It is vital that the Chancellor urgently consults on measures which support exploration – a commitment that the UK Government made in December 2014 but have yet to deliver any follow-up action.
“The benefits from exploration not only boost future production, but will also be felt across the supply chain and the wider economy.”
Last year North Sea exploration reached its lowest level in at least two decades, with only 14 explorations wells drilled, compared with 44 in 2008.
The Scottish Government is now demanding an overhaul of the regulatory and fiscal regimes in the North Sea which would provide greater tax breaks and make further exploration economically viable.