U.K. supermajor BP plc (BP) announced the commencement of oil production from the Kinnoull field in the central North Sea.
Development of the Kinnoull reservoir is a part of wider upgradation of the Andrew field area. The Kinnoull reservoir is tied to BP’s Andrew platform, 230 kilometers east of Aberdeen. This arrangement is likely to facilitate production in the Andrew field area by another decade.
Extensive investment has been made to renovate the Andrew platform thereby improving its integrity and operational efficiency. Efforts in this respect also include the installation of a new subsea system and a 700 tonne topside processing module on Andrew platform.
A 28 kilometer subsea pipeline bundle – the longest such system in the world – is now used to carry production from the Kinnoull field to the Andrew platform for processing. Thereafter, it is exported to the mainland via the Forties pipeline system (oil) and the CATS pipeline system (gas).
Oil and gas production from Andrew and Kinnoull is expected to peak at over 50,000 barrels of oil equivalent per day. Production is expected to be a major contributor to BP's operating cash flow growth.
BP operates Kinnoull with an interest of 77.06%, while the remaining is held by co-venturer JX Nippon Exploration and Production (U.K.) Limited. BP also operates the Andrew, with an interest of 62.75%. Other partners in Andrew include JX Nippon and Talisman-Sinopec holding 27.39% and 9.86%, respectively.
Kinnoull represents the seventh and final major upstream project start-up by BP in 2014. Over the next five years, BP along with its project partners intends to invest over 7 billion pounds ($10.9 billion) in the North Sea. BP has long been present in the North Sea but decreasing resources and expensive operating and drilling costs have compelled it to move its focus to more profitable markets. BP has sold several North Sea assets, including oil fields, to Abu Dhabi National Energy (TAQA).
BP carries a Zacks Rank #5 (Strong Sell). Investors may consider better-ranked stocks like Spectra Energy Partners, LP (SEP), Seadrill Partners LLC (SDLP) and Sandridge Mississippian Trust I (SDT) all of which sport a Zacks Rank #1 (Strong Buy).
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