) has successfully commenced production from the Skarv field in
the Norwegian Sea. The oil giant had a key operational objective
of bringing the field - one of its core higher-margin areas --
into production by the end of 2012.
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Located approximately 130 miles west of the Norwegian coast in
water depths of up to 1,500 feet, the Skarv field is expected to
reach a maximum daily production rate of 165,000 barrels of oil
equivalent per day/BOE/d (40,000 BOE/d net BP) by 2013-end.
During the first six months of production, BP expects the field
to yield around 125,000 BOE/d before achieving the year-end
The Skarv field, which was discovered in 1998, is estimated to
hold oil and condensate reserves of around 100 million barrels
and gas reserves of about 1.5 trillion cubic feet. BP, the
operator, has a working interest of 23.8%. Its partners,
), E.ON Ruhrgas and PGNiG hold 36.2%, 28.1% and 11.9%,
Skarv − with an expected field life of around 25 years − is part
of the British oil giant's major upstream projects that it
commenced last year. The development of the field is an
integral part of its plan that comprises a new highly advanced
floating production, storage and offloading (FPSO) vessel, mainly
to withstand harsh waters.
The development plan also includes five subsea drilling templates
and a 50-mile 26-inch gas export pipeline that is connected to
the Gassled transportation system, enabling it to export to
With this start-up, BP has certainly started the year on a
positive note. The company has moved a long way since the April
2010 oil spill in the Gulf of Mexico (GoM) that killed 11 workers
and poured 4.9 million barrels of oil into the Gulf over 87 days,
polluting shores from Texas to Florida.
Since then, BP remains busy in reshaping its portfolio through
the divestment of smaller non-core properties to pay
spill-related costs, while holding on to potential big resources,
like Skarv. Hence, refocused upstream activities and a leading
position in the Gulf region following the Macondo incident will
definitely help BP in overcoming its near-term tribulations.
BP carries a Zacks #3 Rank, which is equivalent to a Hold rating
for a period of one to three months. We also maintain our
long-term Neutral recommendation on the company.