UK Government Friday Gave Its Consent to Norway's Statoil to Go Ahead with The $7 Billion

The UK government Friday gave its consent to Norway's Statoil to go ahead with the $7 billion Mariner oil field development which is set to be the UK's biggest new North Sea project in more than a decade. 

Statoil took the final investment decision in December to develop the Mariner heavy oil field, a large, technical project which is expected to come on stream in 2017. 

Statoil expects the field to produce for 30 years, with average production of around 55,000 b/d of oil over the plateau period from 2017 to 2020. 

"Mariner will be one of the biggest projects ever in the North Sea...importantly, unlocking heavy oil production marks a new chapter in development, opening the potential for 5% of our oil reserves," UK energy minister Edward Davey said in a statement. 

Discovered in 1981, Mariner field's heavy crude could not economically be recovered at the time due to technical challenges involved in developing the dense and viscous offshore crude. 

Statoil plans to develop the field with a production/drilling platform, based on a steel jacket, with 50 active well slots and a floating storage unit of 850,000 barrels capacity. 

The Mariner field holds nearly 2 billion barrels of oil in place with expected recoverable reserves of more than 250 million barrels of 12 to 14 API crude. 

In June, Statoil estimated that the Mariner field, and the nearby Bressay field, would come on stream in late 2016 or early 2017. Mariner is expected to produce 58,000 b/d and Bressay's output would average 52,000 b/d, the company said in June. 

In 2009, the UK introduced a new field allowance for small fields and challenging HPHT -- high-pressure, high-temperature -- fields as well as heavy oil fields, providing them with allowances to offset against tax, reducing the rate of tax paid once in production. 

Statoil operates Mariner with 65.11% equity stake and holds an 81.6% interest in the Bressay field. Japan's JX Nippon agreed earlier this week to buy Italian Eni's stake in Mariner, raising its holding to 28.89%. 

UK's Cairn Energy holds the remaining 6% stake in Mariner.