Shell has launched a redeveloped oil and gas field in the North Sea

Shell gas field in the North Sea has the potential to supply gas to one million homes. Previously, the Pierce field was solely used for oil production, with gas being reinjected into the reservoir.

The anticipated gross peak output is set to exceed 30,000 boe/d after the redevelopment of the Piece field, which is over twice its previous production rate, with a larger amount of gas being extracted compared to oil. The newly constructed subsea pipelines will convey the gas, whereas the oil will continue to be transported via tankers, as was the practice before the redevelopment initiative.

Located in Block 23/22a and situated roughly 165 miles (265 km) east of Aberdeen, Scotland, the Piece Field operates in water depths of about 262 ft (85 m). The field was discovered back in 1975, with oil production commencing in 1999. The decision to redevelop the field was finalized in 2019.

Gas makes up 60% of the output. Although Shell has sold large parts of its UK fields in the last ten years, it remains one of the largest producers in the North Sea. As Europe’s largest oil and gas group, Shell had record profits of $40 billion last year and global output equivalent to 2.9 million barrels of oil per day.

The Pierce field, located in the central North Sea, is around 165 miles east of Aberdeen. It was discovered in 1975 and started producing oil in 1999, with tanker transportation. Shell decided to redevelop the field in late 2019 to facilitate gas production, and the work commenced in October 2021.

This involved the redevelopment of the floating production, storage, and offloading vessel, drilling new wells, and constructing a new pipeline to export the gas and connect it to the existing pipeline network. According to Zoe Yujnovich, Shell’s upstream director, the field is increasing locally produced gas during a critical time for the UK’s energy security.

To combat criticisms over its tax payments, the company has emphasized its investment in the North Sea. It paid a total tax bill of $134 million for its 2022 earnings under the windfall energy profits levy.

However, only a portion of the bill was paid last year, with the remainder due this year. Additionally, the tax paid was mostly negated by tax rebates, resulting in a net tax payment of $8 million for its UK North Sea operations last year, less than the amount paid to its outgoing chief executive, Ben van Beurden. Shell has been an outspoken critic of the windfall tax in the North Sea.

Last month, its new chief executive, Wael Sawan, stated that he would be cautious about investing in more oil in the UK. Pierce was among the eight projects Shell sanctioned in the North Sea in 2018 and 2019. In 2021, it chose not to pursue the Cambo oilfield development due to strong opposition from environmental groups and lukewarm political support. However, it decided to proceed with the Jackdaw gasfield development last year.

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