The government has approved a Talisman project that will extend the life of North Sea oil fields and unleash millions of pounds of extra investment for the UK economy.
The £1.6 billion MonArb Area Redevelopment Project will mean the production of a further 100 million barrels of oil equivalent from the existing Montrose, Arbroath, Brechin, Arkwright, Carnoustie and Wood fields. The project also includes consent for the new Cayley and Shaw fields.
The project will create or sustain more than 2,000 UK jobs within the fabrication, construction, installation, subsea engineering and drilling sectors. The first major contract for a UK company, worth more than £50 million, has been awarded to Newcastle-based Offshore Group Newcastle Limited (OGN Group), for the engineering, procurement and fabrication of the jacket, the drilling rig’s base.
Energy Minister John Hayes said:
“This significant £1.6 billion investment from Talisman marks the start of a new wave of interest in North Sea oil. Together with industry, we are creating a fertile ground for new investment that is in the best interests of the UK.
“The North Sea has been a bedrock of the UK economy, creating jobs, investment and energy security for nearly 50 years. We must do all we can to prolong the economic life of our oil rich seas and make the most of this precious resource.”
The announcement of the Brown Field Allowance (BFA) by the Treasury was key to unlocking the project. The BFA shields a portion of income in qualifying fields from the Supplementary Charge.
Economic Secretary Sajid Javid said:
“Today’s news is further evidence that the Government’s efforts to stimulate investment in the North Sea are paying dividends.
“By creating tax allowances that allow us to get the most of this vital national resource, we are supporting skilled job creation – including more than 2,000 new posts as a result of the Talisman project. This is good news not just for the North East of Scotland, but the whole of the UK.”
The development comes following work with Talisman as part of the Department of Energy and Climate Change’s (DECC) stewardship process to ensure the full economic development of existing oil fields. DECC also worked closely with Talisman to secure the new investment in Cayley and Shaw by allowing short licence extensions, with deadlines to achieve clearly-specified targets.
Press Release, October 26, 2012; Image: Talisman