The revival of oil exploration in the North Sea is well and truly underway after energy giants BP (LON:BP.) and Royal Dutch Shell (LON:RDSA) received approval for a new North Sea development which they hope will yield 20 million barrels of oil.
The North Sea, which is one of the priciest places in the world from which to extract oil, was impacted by the oil price crash in 2014 and led to many explorers shifting their focus elsewhere and seeking to drill only the most competitive and profitable wells.
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However, as prices have rebounded, so has the attractiveness of exploring for oil and gas in UK waters.
BP and Shell on Monday received approval by the Oil and Gas Authority for their joint venture to drill at the Alligin field - part of the Greater Schiehallion area - off the west of Shetland. It is expected to come on stream in 2020 and should produce 12,000 barrels of all per day at its peak, according to the two companies.
BP, which announced its intention to develop the Alligin in April, said the field would see "stranded reserves" being accessed using existing infrastructure. The company added that developments such as this have shorter project cycles and allow it to bring new production on stream quicker.
Oil and Gas UK said nine new North Sea developments had been approved in 2018 - the same number as in the previous three years.
This is BP’s second approval for the North Sea drilling in quick succession after it was last month given the green light for its Vorlich field, which it hopes will yield up to 30mln barrels of oil.
This comes on the back of recent news that Hurricane Energy (LON:HUR) will start production from the Lancaster field in the first half of next year and Enquest’s (LON:ENQ) move to take full control of the Magnus field.
Zennor Petroleum has also received field development approval for its plans in the Finlaggan field in the central North Sea.