Maersk Oil has cut costs on its Culzean development in the UK North Sea by half a billion dollars.
The Danish oil firm said on Tuesday that the $500 million cost reduction was a result of higher drilling efficiency and “robust” upfront design and project planning.
The company now estimates investment costs for the Culzean project at around $4 billion, CEO Gretchen Watkins said at Maersk Group Capital Markets Day in Copenhagen.
According to the company, a significant improvement of project capex means that the breakeven estimate for the project now stands at $33 per barrel of oil equivalent (boe) – including cost since sanction.
Watkins said: “Achieving cost reduction of 11% during project maturation, we are showing our ability to deliver greater value for investors and stakeholders through effective project delivery and controls.”
The Culzean project was approved by the Oil & Gas Authority in August 2015. The high-pressure/ high-temperature field will be developed using three bridge-linked platforms: a wellhead platform where drilling and production take place; a central processing platform where the produced gas and condensate are processed and exported; and utilities and living quarters, providing accommodation, living space and services for the crew.
“Improvement is largely driven by pulling the levers within our control to enhance Culzean’s project economics. Together with our position in the Statoil-operated Johan Sverdrup field development, Maersk Oil is committed to delivering the next generation of significant North Sea developments,” said Watkins.
To remind, drilling of the first production well at Culzean field started late in September using the Maersk Highlander jack-up rig. Six production are to be drilled on the high pressure/high temperature (HPHT) field, with continuous drilling activity planned over the next five years. First gas is expected to be produced from Culzean in 2019.