A.P. Møller-Maersk and their partners in Danish Underground Consortium (DUC) have revealed plans to invest 4.5 billion kroner in the expansion of the Tyra oil field, the most comprehensive investment in the North Sea in six years.
DUC, which comprises of Maersk as well as partners Shell and Chevron, expects the Tyra expansion to generate an additional 50 million barrels of oil over the next 30 years.
“It’s a massive project which we have investigated and evaluated over the past two to three years and now we are ready to commence the investment plan,” Mark Wallace, country manager for Maersk, said in a press release.
Fifty million barrels is the equivalent of about a year’s production from Maersk Oil’s Danish operations and according to Wallace the investment is necessary to ensure long-term production.
More specifically, the investment is an expansion of the Tyra Southeast sector and includes a new unmanned platform, oil pipes and the drilling of as many as 12 horizontal wells, each six kilometres in length.
DUC’s investment plans also suggest that the Danish sector of the North Sea still offers much potential, despite production declining steadily since 2005, and Wallace said that Maersk was evaluating similar projects that could see the light of day in the next 12 to 18 months.
According to Mærsk, the Danish sector still contains significant oil and gas resources, but getting it out is becoming progressively more difficult, requiring efficient development, new technology and continued large investments.
“The Tyra Southeast development is an example of our efforts to maximise recovery from the Danish North Sea. The investment represents an important part of the next chapter in the Danish oil production,” Wallace said.
The news comes in the wake of the government’s decision in February to continue the current DUC tax agreement through to the year 2043, thereby maintaining the current tax conditions for excavating oil in the North Sea.
DUC’s competitors, however, have not been as fortunate and in late March Germany's Bayerngas threatened to pull out of its projects developing North Sea oil fields after the government imposed a higher tax rate on oil producers. US-based Hess has also vocally opposed the tax increase.
Yet another incident that has compelled Maersk to increase investment occurred late last year when Energitilsynet, the national energy agency, told the state-owned Dong Energy to reduce the rates they charged for the transport of the gas extracted from the North Sea.
Maersk hopes to see the first oil flowing from its new investments in 2015, while the horizontal wells will be drilled between 2015 and 2017.
According to figures from Nordsøfonden, the Danish state's oil and gas company, about 20 percent of the 11 billion barrels of oil that the Danish underground is estimated to contain has been extracted so far.
