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London clears major North Sea gas investment

British waters of the North Sea are still open for business, government says.

By Daniel J. Graeber
London clears major North Sea gas investment
British governments approves development of one of the largest gas fields in the North Sea at a time when most investors are balking in the era of lower crude oil prices. File photo by Stephen Shaver/UPI | License Photo

LONDON, Aug. 31 (UPI) -- Consent for the $4.5 billion development of the Culzean gas field in the North Sea shows the British government remains committed offshore, a minister said.

Danish energy company Maersk said it was given approval to develop the Culzean natural gas field, one of the largest finds in recent years in the British waters of the North Sea. Discovered in 2008, the company said potential reserves could satisfy about 5 percent of British gas demand by the next decade.

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"Today's announcement sends a clear signal that the North Sea is open for business," Chancellor of the Exchequer George Osborne said in a statement. "Despite challenging times, this government has backed the oil and gas industry at every turn, introducing a vital package of support to help it to protect and create jobs."

Low crude oil prices, down more than 50 percent from June 2014 levels above $100 per barrel, have led to a decline in spending on new exploration and production. Maersk said once the field starts producing in 2019 it should keep going for the next 13 years at least.

Natural gas imports are expected to account for 76 percent of total British demand by 2030.

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Though most North Sea oil and gas fields are in decline, industry body Oil & Gas U.K. said a report on the first half of the year production from offshore basins is on pace to increase.

Maersk said field development could support around 6,000 jobs in a sector of the North Sea that is typically associated with high capital costs.

"We are pleased the field will support U.K. economic growth," Chief Executive Officer Jakob Thomasen said in a statement.

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