BP Plc (BP/) and its partners agreed to drill five additional wells at the Clair field west of Scotland’s Shetland Islands as Europe’s second-biggest oil company seeks to expand the giant discovery.
The program will look at the possibility of developing a third phase, the London-based company said today in an e-mailed statement. Royal Dutch Shell Plc (RDSA), ConocoPhillips (COP) and Chevron Corp. (CVX) are the partners in the project that will require an initial investment of more than $500 million. The first well has already started.
“It shows the industry’s commitment to maximize the potential in this area, which could hold up to 17 percent of our oil and gas reserves,” U.K. Energy Secretary Edward Davey said in the statement. “Greater Clair proves there is still a long future for oil and gas production in the North Sea.”
The U.K. government, seeking to boost domestic oil and gas resources and reduce imports, approved tax breaks last year to boost investment in North Sea fields. The incentives included 3 billion pounds ($4.5 billion) of allowances to spur development of “large and deep fields” west of the Shetland Islands.
BP slipped 0.8 percent to close at 459.9 pence in London.
BP and its partners agreed to invest 4.5 billion pounds in Clair Ridge in 2011, the second phase of the project at the field discovered in 1977 that will produce as many as 120,000 barrels of oil a day. The areas west of the Shetland Islands provide the best opportunities for discoveries in the U.K., Wood Mackenzie Ltd. said Jan. 9.
Separately, the U.K. government promised to give tax incentives to encourage investment in offshore drilling. The U.K. will also give 7 million pounds to Newcastle University to establish an offshore engineering research center.
To contact the reporter on this story: Brian Swint in London at email@example.com