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Interview

Martin Rune Pedersen, Managing Director, Maersk Oil, UK

04.02.2014 / Energyboardroom

Martin Rune Pedersen, Managing Director of Maersk Oil North Sea UK, offers insight into the company`s exploitation of smaller fields using existing infrastructure, the strategic role of UK operations in Maersk`s global strategy, and the human resources challenge faced by the industry.

 

In May 2013, Maersk Oil announced that the Gryphon FPSO came back into production. It’s expected that production will ramp up in excess of 20,000 boepd. What do you think has been produced in 2013?

Bringing the Gryphon field back into production is key to Maersk Oil’s ambition of doubling UK production by 2020. Fortunately, we have experienced a safe and very smooth start-up, with performance from the Gryphon field exceeding our expectations.

How has the installation been improved?

Considerable damage was caused to the Gryphon’s subsea architecture by the storm in 2011. This necessitated disconnection of the FPSO to allow repairs and upgrades whilst the damaged subsea infrastructure was removed, and replaced with an optimised design.

For the vessel itself, there have been significant overhauls and upgrades to tanks, positioning and mooring systems, and process control and power management. Alongside critical repairs, we have succeeded in using this incident to bring forward an upgrade of the installation and extend the productive life of Gryphon for another decade.

During the upgrade period, we acquired a new and extensive 4D seismic survey over the wider Gryphon area. In parallel, we gained operatorship of the Maclure field and conducted a successful drilling campaign on the Tullich field, further consolidating our position in this core area.

We now look forward to a high level of drilling activity over the next couple of years, allowing us to maximise recovery and value from the reservoirs.
Another development is that the company received Field Development Plan approval from the Department of Energy and Climate Change for the Balloch oil field. What is the importance of this field to the UKCS operations?

For operators on the UKCS, life extension is key—making sure that we discover and develop all hydrocarbons surrounding existing infrastructure. The rapid development of the Balloch field is a very good example of this. Appraisal drilling on Balloch began in October 2012 and with the results of the appraisal well exceeding expectations, the first production well was drilled around Christmas 2012. Immediately after the well completion in early spring, a Diving Support Vessel started the installation of the subsea elements and tieback to GPIII.

The Balloch field is already producing successfully and we have plans for a second well in 2014. Total investment in the two Balloch wells is expected to be around £150 million.

This project was praised by the UK Minister who said, “Balloch is an excellent example of a smaller field using existing infrastructure.” This type of development will become increasingly important for maximising oil and gas recovery from the UK Continental Shelf and creating jobs in the supply chain. How have you been able to fast track this project?

First and foremost it is about technical knowledge and being able to identify and de-risk the prospects. Then it is a matter of quickly securing rig capacity to drill the exploration wells. Following our acquisition of the remaining 30 percent equity in Dumbarton, Lochranza and Balloch in 2012 from Noble Energy, we were able to fast track the project, and maximise production through the Global Producer III FPSO, which is core to Maersk Oil’s overall production strategy.

By tying back to existing infrastructure, we are minimising cost and making even smaller oil fields economically viable. This helps us to unlock more oil and gas from our existing assets, which is one of Maersk Oil’s priorities. Balloch is an excellent example of a successful near-field development.

The project also benefited from the small field allowances in the UK fiscal regime. Maersk Oil has a number of smaller fields that meet the threshold, which helps make these fields viable to develop.

What are the other key developments of 2013?

We have Flyndre-Cawdor, which is a tieback opportunity to Clyde. We are just completing the final development considerations on that, so we expect development approval in early 2014. Culzean, our first High Pressure, High Temperature (HPHT) project, is another exciting project that is currently in the ‘Select’ phase. We are selecting which concept it will be, either a stand-alone process platform or a tieback to existing infrastructure. This is expected to be finalised in early 2014.

In addition, Maersk Oil is investing USD 1 billion in the Nexen-operated Golden Eagle field. First oil production is forecast for late 2014 and the development is expected to have an initial gross production rate of up to 70,000 barrels of oil equivalent a day, adding 20,000 barrels a day to Maersk Oil’s portfolio. The facilities built at Golden Eagle can act as a hub for future tiebacks.

What is the strategic role of the UK operations within the company’s global strategy?

Maersk Oil’s strategy is to reach an incident-free and sustainable entitlement production of 400,000 barrels a day by 2020. Currently we are operating around 600,000 barrels oil equivalent a day with an entitlement share of 235,000 barrels a day. This means the company has an ambitious target to meet in order to reach its goal in seven years’ time.

Contributing to Maersk Oil’s overall target, our ambition in the UK is to double production within five to seven years. There are still substantial opportunities to be had in the North Sea and there is a strong appetite for investment. It is a core area for our business globally and there is much potential around existing acreage and infrastructure, where we invest heavily, as well as in exploration prospects.

We often hear that it is important that new ideas are coming from the field, how important is that to you and how close to the field are you?

I try to keep as close as possible without getting in the way. I am closely involved in terms of attending technical meetings and when I have the opportunity to go offshore to meet the teams, I go. It is always a pleasure seeing our operations first-hand and to exchange ideas with the teams.

Furthermore, safety is the first priority for us and this is another reason for visiting the field. Our core aim is to ensure that the engine room, our operations, run safely and efficiently. This means we focus on process safety, including our maintenance systems, our integrity management and our management systems, as well as occupational safety.

As a solution to the lack of human resources in the sector, the industry is getting serious about ex-military recruitment: translating their skills into oil and gas. Considering your background with the Danish Army, do you agree and what are the skills you have developed in the army that are useful for O&G?

I would support OPITO’s initiative. Skill shortages have been identified as one of the biggest challenges facing the industry and ex-military personnel are in high demand because they are well-trained, safety conscious, and dependable. Furthermore, many military skills, such as engineering and project management, are widely transferable to the oil and gas industry.

Prior to joining Maersk in 1997, I was a reserves officer in the Danish Army. After having held leadership roles in the Army and finalising my Master’s Degree at University I joined Maersk Oil. I was attracted to the opportunity to work in a very complex and challenging industry with large projects and lots at stake.

At Maersk some of our best people have backgrounds with the military or in other relevant industries. At different levels you need different skills, so we are very open to attracting people with different backgrounds. Though we are quite selective, we are always on the lookout for skilled people with the mindset to challenge and the drive to help the company progress.

 

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