Elaine Maslin, 23rd February 2012
Centrica’s upstream business is on target to hit 70million barrels of oil equivalent (boe) annual production by the end of 2013 after a three-month spending spree, the firm’s UK upstream boss said today.
Jonathan Roger, managing director of Centrica Energy Upstream, based in Aberdeen, said combined spending of £1.4billion over the past three months had helped add about 55,000barrels of oil equivalent per day (boepd) to production, an increase of 40%, and boosted reserves by 45%.
This would help the firm towards its stated an aim to boost production, at 48.2million boe in 2011, by 50% in the next three-four years.
Mr Roger said the firm would also be looking to expand geographically, potentially in North America – if the right deals arose – but also further afield longer term.
However, he said: “We have done a number of deals lately. The big focus for the next six-12 months will be integrating them in to the business and driving value from them.”
There would also be focus on starting production on its southern North Sea Ensign platform in the first quarter and production drilling on its York field, also in the southern sector, due online in 2013.
The recent spending spree was on stakes in fields including Statoil’s Statfjord fields and the high pressure high temperature Valemon field and Total’s interests in a number of Central North Sea assets, announced earlier this week.
Investment in the North Sea in 2012 will increase from £600million in 2011 to £750million in 2012, despite overall capital spending dropping from £1.6billion to £1.4billion over the same period, Centrica said.
The firm would also be making an investment decision on the southern North Sea GDF-operated Cygnus field – understood to be one of the largest undeveloped discoveries in the basin – in mid-2012.
Annual production for 2011 slumped 15% from 54.3million boe in 2010 to 48.2million in 2011 due to natural declines, maintenance and commercial decisions to shut in the South Morcambe gas field. All other fields saw production increase, said Mr Roger.
However, profits in the upstream division rose 36% to £769million, on higher oil and gas prices.
Centrica’s 2011 production was 76% UK and Netherlands, 15% Norway and 9% international. This is expected to change to 62% UK, 32% Norway and 6% international, following the recent deals. Of that, about 80% is gas.
Centrica Upstream employs about 1,000, with about 20% of those offshore and 350 in Aberdeen.