Premier Oil gets green light for North Sea oil field

Oil and gas explorer Premier Oil has been given the go-ahead to develop a new field in the North Sea.

Shares in FTSE 250-listed Premier rose 1.6pc on news the company hoped to produce as much 96m barrels of oil equivalent (boe) from the Catcher field in the central North Sea, having had its field development plan approved by the Department of Energy and Climate Change.

The project will involve drilling 22 wells across the Catcher, Varadero and Burgman fields, of which 14 will produce oil while the others are used to inject water into the rocks to force the oil out.

The oil will be collected from the producing wells by a floating production, storage and offloading vessel which will pump it to tankers. Gas from the project will be exported through the Shell-Esso Gas & Liquids terminal near Aberdeen.

Premier said all major service contracts for the project have been awarded and it hopes the first oil will be produced in 2017. Once production begins, the company expects output to peak at 50,000 boe per day.

Simon Lockett, Premier’s chief executive, said: “Having discovered Catcher in 2010, we are extremely pleased to have brought [it] through the development approval process. Once on-stream this project, which has been facilitated by the Government’s small field allowances, will underpin our growing cash flows.”

The small field allowance offers energy companies tax relief on onerous charges they would otherwise pay and is intended to encourage development of otherwise uneconomic fields.

Michael Fallon, Minister of State for Energy, said: “The Catcher area development shows there continues to be an extraordinary level of interest in North Sea oil and gas, which is excellent news for industry and for the whole of the UK. The project represents over £1bn of investment and almost all of the subsea expertise and equipment needed for this development is being supplied by British companies right across the country.”

Premier Oil shares closed up 5.5 at 341.1p.

Premier Oil is the operator of the scheme with 50pc of the equity, and its partners are Cairn Energy with 30pc and MOL Group with 20pc.