Total Expects Elgin-Franklin Field to Restart Soon
LONDON - Total SA expects to get the go-ahead in the next few days to restart operations at its Elgin-Franklin gas field in the North Sea after last year's gas leak, an event with significance for the company and the U.K. economy.
Restarting production at the field is important for Total, which missed production targets in 2012, while Elgin-Franklin contributed around 9% of the U.K.'s oil and gas production before the shutdown. The timing of its restart has particular importance as the country's economy teeters on the brink of its third recession in five years.
North Sea oil and gas production shutdowns played havoc with U.K. economic output last year, and economists say the resumption of production at several closed fields, including Elgin-Franklin, would make a significant positive contribution to U.K. gross domestic product in the first quarter.
Extractive industries, which include mining and quarrying but to which North Sea oil and gas contributes the vast bulk, contribute 2.4% of total U.K. GDP, according to the Office for National Statistics. The U.K. economy shrank 0.3% between October and December, a decline the ONS said was mostly caused by the closure for maintenance of the Buzzard oil field, the North Sea's largest, for much of that period.
"What's important is to restart Elgin-Franklin now as soon as we can...not only because we need the production, not only because the U.K. needs the production, but to say that it's been managed in a proper way," Total's chief executive Christophe de Margerie said at a briefing in London.
Still, the ramp-up in production from Elgin-Franklin and other associated fields will be slow. Total's Senior Vice President of exploration and production for Northern Europe, Patrice de Vivies, said the field will reach only half its pre-shutdown output of 140,000 barrels equivalent of oil and gas a day in 2013, and won't reach full output until 2015.
Total can't restart the field until it gets approval from the U.K's Health and Safety Executive, or HSE, which regulates offshore oil and gas installations. A spokesman for the body said it is reviewing the company's proposal, which it received at the end of November and has 90 days from then to consider.
The HSE spokesman declined to discuss its continuing investigation into the incident.
The gas leak on the Elgin platform, which is 240 kilometers, or about 150 miles, east of Aberdeen in Scotland, wouldn't happen at other North Sea oil and gas platforms or Total's operations elsewhere because it was the result of unique circumstances, said Mr. de Vivies.
The leak occurred when bromide used in fluid pumped into oil wells during the completion of drilling chemically reacted with grease used on the drill casing, causing corrosion "cracking" that allowed gas trapped in rock above the main Elgin reservoir to seep to the surface.
"It was a unique type of corrosion not linked to aging. We haven't changed procedures elsewhere because it was unique to Elgin," Mr. de Vivies said.
The HSE spokesman declined to talk about its continuing investigation into the incident.
Safe operations at oil platforms are in sharp focus following BP PLC's Deepwater Horizon disaster in April 2010, which resulted in 11 deaths and became the worst offshore oil spill in U.S. history.
Jason Douglas contributed to this article.
Copyright (c) 2013 Dow Jones & Company, Inc.
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