LONDON (Dow Jones Newswires), Jun 02, 2008
Total SA (TOT) confirmed Monday it will this summer begin looking for potential partners for the construction of a pipeline to deliver gas from undeveloped fields in the West of Shetland region of the U.K. North Sea to the mainland.
A spokesman for the company said the West of Shetland Task Force, a group of companies with oil and gas interests in the region that has been studying development options, has endorsed talking to third parties about participating in the financing of the pipeline.
The spokesman said Total hasn't yet given the go ahead for development of the Laggan field, the largest gas resource in the area. If that field goes ahead, Total has also not decided whether the pipeline that brings the gas to shore should also be built with extra capacity to ship gas from the region's other fields in future.
Industry body Oil and Gas U.K. says the government should offer tax incentives to encourage development of infrastructure like this pipeline in the area, which would help slow the decline of U.K. oil and gas production.
Discussions within the West of Shetland Task Force, consisting of U.K. energy giant BP PLC (BP), U.S oil majors Chevron Corp. (CVX) and ExxonMobil Corp. (XOM), Denmark's DONG AS, the U.K. government and Total, are ongoing and "nobody has closed any doors," the Total spokesman said.
West of Shetland is one of the last great undeveloped resource areas of the mature North Sea, which the U.K. government says could contain up to 4 billion barrels equivalent of oil and gas, 17% of remaining reserves.
But the area is far from existing oil and gas infrastructure and fields are located in deep and stormy seas, so development will be challenging. The government estimated in September last year development of all resources in the area could cost GBP4 billion.
U.K. Prime Minister Gordon Brown traveled to Aberdeen last week to discuss ways to boost falling oil production after prices breached $135 a barrel. Expensive road fuel and rising gas and electricity bills have become a lightning rod for protest against Brown's already unpopular Labour government.
Copyright (c) 2008 Dow Jones & Company, Inc.
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