Oct. 10 (UPI) -- Shell United Kingdom Ltd. announced on Wednesday an investment decision in the North Sea to develop a gas field, just a day after Royal Dutch Shell CEO said the group was bullish regarding expectations of natural gas demand growth.
The company announced a "final investment decision for the Arran gas and condensate field" and said that it will become the operator of the project, in partnership with Rockrose Energy and Dyas U.K. Ltd.
This is the fourth investment announcement by the company in the North Sea in 2018 "which will result in further production growth for Shell following the decision to redevelop the Penguins field in the northern North Sea, the Alligin field West of Shetland and the Fram field in the Central North Sea."
At peak production, the area will produce around 100 million cubic feet of gas and 4,000 barrels of oil per day, which combined is 21,000 barrels of oil equivalent per day.
The announcement comes one day after a speech by the CEO of Royal Dutch Shell, Ben van Beurden, who said that the company is investing heavily in natural gas because of fast-growing demand.
"We have invested heavily in gas to the point that we lead the international oil companies, and we intend to keep it that way," Beurden said, speaking at the Oil and Money conference in London.
"Why? Because gas is the fastest growing hydrocarbon market. Between 2018 and 2035 Shell expects natural gas demand to grow at an average of 2 percent per year. That is twice the rate of total worldwide energy demand," Beurden added.
Natural gas is primarily made up of methane. Methane is the most basic hydrocarbon, and is used primarily as fuel for heat and light. It has been associated with reduced carbon dioxide compared with other energy sources like coal and crude oil products.
Methane can also be cooled down to a liquid form in a mix that reduces its size about 600 times, and also contains some ethane. The resulting product, LNG -- which can be shipped and stored as long as it remains cooled -- will see even greater demand, Beurden said.
"The future of liquefied natural gas looks even better. We expect demand for LNG to increase at an average of 4 percent per year until 2030," he added.
The growing demand for natural gas "means new projects must come on stream," Beurden said.
The Arran field is located about 149 miles east of Aberdeen, close to the UK/Norway median line. The resource is located at about 85 meters water depth.
Shell needs to drill two wells to start production. "The natural gas and liquids they produce will be transported via a newly installed subsea pipeline to the Shearwater platform," the Shell UK statement said.
The objective is "to transform and revitalize Shell's UK upstream business," said Steve Phimister, Shell's vice president for upstream in the U.K. and Ireland. "Arran is an important addition to Shell's portfolio as we seek to strategically grow our central North Sea production around the Shearwater hub."