BP possibly to be compelled to shut down Bruce gas field in North Sea

By AzerNews

Energy giant British Petroleum may be forced to close down the Bruce natural gas field in the UK North Sea ahead of schedule as a result of the sanctions imposed against Iran, Press TV reported.

Dow Jones reported on Tuesday that without gas from the adjoining Rhum field, of which the National Iranian Oil Company is a joint owner, BP might have to close down the Bruce field.

The British oil company halted operations at Rhum field in November 2010 after the West imposed sanctions against Iran's energy sector.

The Rhum gas field is located 240 miles (390 km) north-east of Aberdeen, Scotland in 109 meters (350 ft) of water. Development of the Rhum project cost approximately £350 million. Prior to the start of production, Rhum was the largest remaining undeveloped gas reservoir in the UK continental shelf. The partners in the Rhum field are BP (operator) with 50 percent and Iranian Oil Company (U.K.) Limited (a subsidiary of the National Iranian Oil Company), also holding 50 percent.

Rhum contains recoverable gas of 90mn bl of oil equivalent and began producing in 2005. Production was about 5.4mn m³/d of gas prior to the shut-down, as well as about 1,000 b/d of 46°API oil, which was blended into the Forties stream.

"The long-term future of the Bruce facilities is very closely tied to the ability to produce from Rhum. Given the uncertainties, we are considering what a decommissioning project would entail and how long it would take to execute," a BP spokesman was quoted as saying.

Major partners in the field - operator BP and France's Total - have been unable to agree a solution with the UK government that would allow production to resume at Rhum without violating sanctions. If a solution is not found within one year from now, early shut-down and decommissioning of the gas field could be possible.

However, closing down the Bruce field would undermine the UK government's attempts to strengthen its energy sector, which has been experiencing inflation due to "cold weather, and unexpected production and pipeline outages."

Bruce gas field came on stream in 1993 and was one of the UK's largest gas producing fields. It produced 3.9mn m³/d of gas and 4,682 b/d of oil in 2010, but production has been weak in the last two years, making up 1.9mn m³/d of gas and 300 b/d of of oil in June 2012, prior to a three-month maintenance period that began in July.

The high costs typically associated with decommissioning an offshore facility mean that the Bruce partners are likely to also examine ways of bringing down operating costs, or possible in-fill drilling to maximize production, before making any final decision on closure.

The Bruce field partners are BP with 37 pct, Total with 43.25 pct, UK-Australian resources company BHP Billiton with 16 pct, and Japanese trading house Marubeni with 3.75 pct. BHP Billiton said in December that it is considering whether to sell its UK upstream assets.