UK and Norway Open Way for Two New North Sea Projects

UK and Norwegian Governments have agreed arrangements to pave the way for the development of two new North Sea fields - Boa and Playfair.

To maximize the opportunities for North Sea activity and use of infrastructure, both Governments recognize the need to find ways to move projects forward more easily. Boa and Playfair both have small extensions across the continental shelf boundary - and previously would have been subject of complex agreements between the UK and Norway on how they should be jointly regulated. However, the innovative approach being taken here for the first time will allow the fields to be regulated by the State with the majority field interest - considerably simplifying the process of bringing the fields into development.

Commenting on this new milestone in UK/Norwegian co-operation the Norwegian Energy Minister, Thorhild Widvey said: -I hope other fields will benefit from similar innovative approaches, as the one taken to progress Boa and Playfair. The current agreement arises from initiatives to reduce barriers and to progress trans-boundary projects, and is a clear demonstration of the benefits that can be obtained through close co-operation.

The UK Energy Minister and I will ensure that our countries continue the positive dialogue so that opportunities can be seized on both sides of the boundary. I hope that we will be able to look at other fields in the future that might be treated in similar ways to Boa and Playfair.

Speaking from London, the UK Energy Minister, Mike O'Brien commented: -I am delighted that we have been able to bring forward two trans-boundary projects in such a pragmatic way. Both the UK and Norway are taking a dynamic approach to ensure that the North Sea potential is maximized.

Boa and Playfair have emerged as a result of constructive co-operation between UK and Norwegian licensees and Governments. These positive results have been achieved via close dialogue through PILOT- KON-KRAFT, the Government/industry forums which aim to maximise North Sea investment and activity.

The Playfair development is operated by CNR International, who is drilling a well from their Murchison platform and expects to begin production this autumn. The Boa field is part of the Alvheim development which is operated by Marathon.

The Playfair development lies almost entirely on the UK Continental Shelf but with a small extension on to the Norwegian side. And the Boa development is almost entirely on the Norwegian Continental Shelf with a small extension into the UK area.

Past trans-boundary projects of this nature have been subject to individual treaties between the two Governments. However, both Governments recognized that the circumstances in the case of the small Playfair and Boa fields are very different to those surrounding larger fields such as Statfjord, Frigg and Murchison. Over the past months, the Governments have been working closely with the licensees to find pragmatic ways to bring these projects forward.

Both Governments recognized that these fields were relatively small and that under current plans, the extensions on to the neighboring continental shelf would be unlikely to have a significant impact on overall recovery. The Government with the majority interest will therefore issue all approvals, thereby removing the need for joint agreement across a range of issues.

However, there is also a recognition that offshore developments sometimes produce the unexpected, particularly if, like Boa and Playfair, they are small and relatively un-appraised. Special provisions have therefore been included to reconsider the way that these projects are handled if the reserves turn out to be larger than first expected.

Nearly three years ago under the guidance of PILOT and Kon-Kraft (the Norwegian equivalent to PILOT) the UK and Norway embarked on an initiative aimed at strengthening co-operation between our two countries. This was set in the context that the UK would become a net importer of gas in the medium term and Norway had a growing ability to export energy to the UK. In addition as neighbouring countries we share a common interest in the North Seas oil and gas reserves. The border between our two nations is extensive and this presents both opportunities and challenges in seeking to maximise the value of hydrocarbon reserves that lie close to the median line. The benefits of closer co-operation would have the potential to unlock significant stranded reserves within the Median corridor and thus bring new prosperity to all elements of the Supply Chain with a co-operation prize of as much as $2 billion.