UK's Premier Oil to decommission Balmoral hub in North Sea Forties area

UK independent Premier Oil is bringing forward to October the closure of the Balmoral oil hub in the North Sea, it said June 23, the latest in a string of late-life fields to be decommissioned due to the oil price collapse.

In a statement, Premier noted it had already extended the life of Balmoral from an anticipated cessation date of 2017, and said it had planned to decommission the field only a few months later, in 2021.

"As a result of the low oil price environment, Premier has decided to bring forward final production from its operated Balmoral area from 2021 to October 2020. The Balmoral area was Premier's first operated UK North Sea producing asset and has been instrumental in enabling the company to build and develop its operatorship capability in the UK North Sea," Premier said, adding Balmoral had produced over 190 million barrels of oil equivalent since starting up in 1986.

It is the latest in a number of decommissioning announcements by North Sea operators, notably Premier and its rival EnQuest, spanning mature fields with modest levels of production in both the Brent and Forties areas.

North Sea oil output has been dented by the COVID-19 crisis, with operators reportedly dialling back production as workforce numbers were reduced. The oil price collapse has also crimped longer term spending plans, impacting production in the years to come. However, the decisions taken so far to decommission fields in response to the crisis look likely to have a relatively modest production impact. The UK's oil production was down about 7% on the year in the first quarter, at 1.1 million b/d.

Premier's Balmoral hub also comprises the Stirling, Brenda and Nicol fields and provides infrastructure for two other fields operated by Spain's Repsol, Beauly and Burghley.

The Premier fields produced 1,500 b/d of crude on average last year and the Repsol fields another 1,500 b/d, with all the production feeding into the UK's largest crude delivery pipeline, Forties.

Premier announced in March the closure of two other North Sea fields, Huntington and Kyle, while EnQuest announced the permanent closure of four fields in the Brent area: Broom, Deveron, Heather and Thistle.

The March announcements, in the teeth of the COVID-19 crisis, appeared more significant in terms of near-term impact. Huntington produced about 5,800 boe/d last year and Kyle about 3,500 boe/d, both fields loading from offshore facilities.

The four fields being decommissioned by EnQuest, meanwhile, accounted for nearly 10,000 b/d last year, but had been out of action since late-2019 due to structural issues at one facility and a gas compressor fire at another.

The shutdown thins Premier's asset portfolio in the North Sea. By far its largest UK producing asset is the Catcher oil field, on stream since 2018, while it plans to start production from the Tolmount gas project by the end of the year. It is also in the process of buying BP's Andrew production hub and its stake in the Shearwater gas and condensate hub, in a protracted process held up by a dispute, now resolved, with the company's largest creditor.