UK North Sea: EnQuest Reports Kraken First Oil Delivered

EnQuest said that first oil from the Kraken development in the UK North Sea was delivered on June 23. During the initial ramp-up period, the 13 wells that have been drilled and completed to date, comprising 7 producers and 6 injectors, are being brought online in a phased manner, to maximize long term productivity and value, the company said.

EnQuest has an interest of 70.5% in Kraken, with its partner in the development Cairn Energy PLC having the balancing 29.5%.

EnQuest CEO, Amjad Bseisu said: “EnQuest is delighted to confirm that first oil has been achieved on the Kraken development, delivered on schedule and under budget. Drill centers 1 and 2 are fully complete and work continues on drill center 3; as a result, further production capacity will come online into 2018 as these further wells are put onstream.”

Kraken is a large heavy oil accumulation in the UK North Sea, located in the East Shetland basin, to the west of the North Viking Graben, approximately 125 km east of the Shetland Islands. The field contains c.128 MMboe of gross 2P reserves, making it one of the largest new oil fields to come onstream in the North Sea since Buzzard. Gross peak oil production expected to be approximately 50,000 barrels of oil per day. The gross capital costs of the development are currently estimated to be approximately $2.5 billion, down from $3.2 billion at the time the project was sanctioned; good planning and project execution including good progress on drilling and on the execution of the subsea programme were key factors in the capex savings.

Drilling and formation evaluation have shown excellent correlation with pre-sanction subsurface expectations, said EnQuest.

According to Bseisu, “Kraken is a transformational project, made possible by EnQuest’s differential capabilities; the right mix of integrated technical capabilities, high levels of efficiency and cost discipline. With production from Kraken, EnQuest is moving from a period of heavy capital investment, to a focus on cash generation and deleveraging the balance sheet.”

UK Business and Energy Secretary Greg Clark said, “This is a landmark project for EnQuest and the UK oil and gas sector as one of the largest new oil fields to come on-stream in the North Sea in a decade. This has been made possible through significant UK government support to encourage investments of this type in the North Sea, supporting thousands of highly-skilled jobs.”

According to UK Oil & Gas Authority Chief Executive, Dr Andy Samuel, “As one of the most significant oil field projects in the UK Continental Shelf, successful production from Kraken is positive news for the whole basin. It has the potential to open up additional heavy oil opportunities in the Northern North Sea, with other developments in the pipeline. It’s particularly pleasing to see a project delivered under budget, having clearly benefitted from a strong partnership between operator and key service providers.”

Kraken is EnQuest’s seventh operated production hub. At the time the development was sanctioned, using Oil and Gas UK’s reporting metrics it was estimated that the development would support more than 20,000 UK jobs during the construction period of the project and an average of approximately 1,000 operational jobs in the UK for each year of the Kraken field’s life of over 20 years.