Britain: Canadian firm’s North Sea oil field is biggest find in 25 years

EnCana has drilled eight wells in Buzzard field, estimates 500 million barrels of recoverable oil from field in area

Bruce Stanley

Associated Press Business Writer

A Canadian oil company prospecting in part of the North Sea overlooked by a larger rival has discovered a field that could rank as the region’s biggest petroleum find for 25 years, the government said June 20.

The Buzzard oil field off Scotland’s eastern coast could contain more than 1 billion barrels of crude, Energy Minister Brian Wilson said. He based the announcement on an appraisal by EnCana, the firm that first discovered oil there one year ago.

EnCana has drilled eight exploratory wells since then and plans to begin producing oil at Buzzard in 2005. Analysts suggested the firm should be able to recover about half of the crude contained there.

“To actually get to this stage in 2002 and find a 500 million-barrel recoverable field is awe-inspiring,” said Jason Kenney, an industry analyst at ING Financial Markets in Edinburgh, Scotland.

Many of the North Sea’s biggest fields were discovered during a flurry of exploration and development that began in the 1970s off the coasts of the United Kingdom and Norway. More recent finds have generally been smaller.

Buzzard was originally part of a concession held under license by Amoco Corp. EnCana, known formerly as PanCanadian Energy (UK) Ltd., started exploring at Buzzard in 1998 and struck its first oil there last June.

Area believed to be of limited potential

“This is very good news for the future of the U.K. oil and gas industry.”

EnCana estimates the “oil in place” at Buzzard to total between 850 million and 1.1 billion barrels. The firm expects to spend around $1.5 billion to extract it, the Department of Trade and Industry said.

Wilson cited EnCana’s success as vindication for the government’s policy of allowing newcomer companies to search for oil in offshore areas where existing license-holders have chosen not to explore for crude or develop an earlier find. Britain has about 250 such “fallow” offshore areas that the government wants to develop.

License in area relinquished by BP

Amoco, now owned by BP PLC, relinquished the area containing Buzzard after making a review of where it wanted to focus its exploration activities. Amoco had to choose where to invest its finite resources and decided that Buzzard didn’t fit in then with its global strategic portfolio, BP said.

Britain began producing oil in the North Sea in 1975. It had 5 billion barrels of total proven oil reserves in 2000, according to last year’s edition of the authoritative BP Statistical Review of World Energy.

The Department of Trade and Industry hopes to attract $4.5 billion in annual investment in North Sea oil.

Conoco sells some U.K. North Atlantic-North Sea interests

Conoco said the deal gives OMV a 32.5 percent equity in Blocks 204/14 and 204/15, of which Conoco is operator. The blocks, 84 miles west of the Shetland Islands, contain the bulk of the Suilven reservoir, which BP discovered in 1996 with an exploration well in Block 204/19, immediately to the south.

After winning the unallocated 204/14 and 204/15 blocks in a so-called mini-licensing round in 1997, Conoco drilled two wells proving that Suilven contains both crude oil and natural gas. The entire discovery, in which BP, AGIP and Amerada Hess are the other co-venturers, remains to be unitized.

Conoco acquired its 22.39 percent interest in Block 20/7a, which lies 69 miles northeast of Aberdeen, Scotland, through its acquisition of Saga UK in 2000. Like Suilven, the block, which is operated by PanCanadian (now EnCana Corp.), is not included in Conoco’s portfolio of strategic developments and prospects in the U.K.