Shell to invest in Shearwater gas infrastructure hub

SHELL and its partners ExxonMobil and BP have announced a final investment decision (FID) for a Shearwater gas infrastructure hub.

The Shearwater field was discovered in 1988 and first developed in 2000. The Shearwater platform is located in the North Sea approximately 225 km east of Aberdeen, Scotland and is a joint venture between Shell, ExxonMobil, and BP. Shell operates the platform. Currently, dry gas produced by the platform flows through the Shearwater Elgin Area Line (SEAL) to the Bacton gas terminal, a Shell-operated terminal located on the coast of Norfolk, UK.

The JV plans to modify the platform and install a 37 km pipeline running from the Fulmar Gas Line (FGL) to Shearwater. Reuters reported that the modification will allow production and processing of wet gas. The pipeline will enable the wet gas to flow into the Shell Esso Gas and Associated Liquids (SEGAL) pipeline.

Initially, gas will be processed at the St Fergus gas terminal in Scotland before natural gas liquids (NGLs) are sent on to the Fife Natural Gas Liquids (FNGL) plant and Fife Ethylene Plant (FEP) at the Mossmorran gas plant in Fife, Scotland. Here the NGLs will be separated and exported to customers.

Shell has been working on the ‘Central Graben strategy’ which links fields such as Fram and Arran back to the Shearwater platform hub. The strategy is expected to simplify the production process on Shearwater and maximise the value of wet gas flowing into the SEGAL system and on to FNGL and FEP.

The wet gas export capacity expected at the Shearwater hub’s peak production is about 400m ft³/d of gas, which is equal to about 70,000 bbl/d of oil equivalent.

According to Reuters, a Shell spokesman said that the pipeline installation is scheduled for 2019, and the platform expansion for 2020. The SEAL pipeline will continue to operate, and gas will flow from the Elgin-Franklin fields, to be processed at Bacton.

Steve Phimister, vice president of upstream in the UK at Shell, said: “This is part of our strategy to grow our gas production from around the Shearwater platform and it underscores Shell’s commitment to maximising the economic recovery of oil and gas from the North Sea.”

He added: “Through close collaboration with our partners and suppliers, we have been able to reduce costs, simplify the production process and create an important production hub at Shearwater. Fifty years after Shell began working in the North Sea, we continue to invest in projects to deliver more gas to UK consumers for years to come.”

This FID is the seventh for Shell and its partners in the UK North Sea this year. Previous FIDs covered the development of the Fram, Arran, and Penguins fields, the BP-operated Alligin field and the Gannet E field along with the Gannet Export infrastructure investment in the central North Sea.

BBC News reports that the budget for the Shearwater project is likely to be more than £100m (US$126.8m) and that this latest FID shows that Shell is willing to commit to maturing assets, particularly those in the Graben area of the central North Sea.

BBC News also reported that splitting wet gas, which is possible at the Mossmorran plant in Fife, is not possible in England. According to BBC Scotland business and economy editor Douglas Fraser, switching to the Aberdeenshire landfall adds commercial value and opens up other options, such as linking to the Jackdaw field.

The article speculates that the Oil and Gas Authority (the “new-ish” Aberdeen-based regulator tasked with maximising recovery from the North Sea) is behind this.