Shell’s commitment to developing the Fram field “shows there is confidence in North Sea gas” once again, an industry expert said.
Hari Vamadevan, senior vice president at technical advisor DNV GL, said called the move “a great indication of how we can use our existing assets and existing gas network” to see a successful energy transition and make offshore gas a real North Sea asset.
Admitting that there was concern about the future of North Sea gas when Fram was parked five years ago, Mr Vamadevan said he was excited to see the possibility of “stranded” North Sea gas being extracted.
He said: “The lifting costs and new build costs have come right down for the North Sea so it’s a competitive basin and perhaps there was stranded gas for cost reasons. You can now see them moving forward because we have the network offshore and we have big gas distribution onshore.
“I think there are bigger gas fields internationally than there are in the North Sea but I think what there is in the North Sea we will start to see – like Fram – subsea tiebacks to existing infrastructure.
“I think when Fram was parked there was concern about the future of gas. Fram was an approved project with Shell. I recall it because we were all working on it many years ago. The fact that Fram has come back shows there is confidence in North Sea gas.”
Shell’s Fram field announcement comes on the back of DNV GL releasing a recent survey of 813 oil and gas sector leaders in which 86% said that they expect gas to play “an increasingly important role” in the global energy mix over the next decade.
Confidence in North Sea gas has been renewed with Shell announcing a final investment decision on the project yesterday.
Mr Vamadevan said the UK is in a “well-established” position due to its gas network and that he believes gas projects will return to the North Sea as a consequence.
He said: “There are a lot of initiatives around gas in the UK, mainly because we’ve got such a well-established gas network that’s sitting there. The fact that Fram is tied back to Shearwater is a great indication of how we can use our existing assets and existing gas network and make sure that we can extend that through the energy transition.
“In terms of pure gas developments the downturn hit the North Sea really hard. Effectively for the last few years there hasn’t been much moving forward full stop. What we’ve now seen – and the announcement of Fram was great – and what’s really exciting for us is that we’ve seen Shell on the Penguins field. So we’re starting to see an increase in activity in the North Sea. For me, the North Sea has confidence returning and gas projects will follow.
“In the UK we’ve been in an incredibly strong position on gas for the last two decades. We’ve had a domestic offshore gas industry; we’ve had pipelines coming from Europe and we’ve had LNG import terminals. Mainly because we’ve got a huge gas distribution network that is the most cost-effective distributer of energy to homes in the industry that you can possibly have today.”
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