BP, Shell Tie Future to North Sea Operations

Two of the most veteran oil and gas producers in the UK North Sea, namely Royal Dutch Shell and BP, still tie their future to the aging offshore basin despite a broad retreat in recent years.

Both companies plan to explore new resources this year in the North Sea, one of the oldest deepwater hubs faced with harsh weather conditions, executives told Reuters.

The two oil giants have sold billions of dollars worth of North Sea fields, many of them nearing the end of their life, in recent years. But still they see golden opportunities ther, as new technologies open up resources that can be profitable with oil trading at around $50 a barrel and in some cases lower.

“We like the North Sea. It has been an important hub for us for a long time and it will remain one,” BP Chief Executive Bob Dudley said on the sidelines of the Offshore Europe conference in Aberdeen, Scotland, from where many companies hold their North Sea operations.

“This year, we will be drilling six exploration wells in the UK North Sea. That’s more than we drilled in decades.”

In another sign of confidence, France’s Total last month acquired Maersk Oil, which will see it leapfrog Shell and BP to become the second-largest North Sea producer after Norway’s Statoil.

The parallel investments and retreat in the North Sea come as the basin prepares to dismantle dozens of platforms and plug hundreds of depleted wells that will cost operators, such as BP and Shell, more than $60 billion by 2050.

The North Sea became a major offshore hub in the 1970s. Although its production peaked in the late 1990s, it has staged a modest recovery since 2015. It is believed to hold an additional 20 billion barrels, according to the British government.