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News / Kraken wakes

The Kraken field layout. Image EnQuest

LERWICK Port Authority hopes to benefit from the construction of a major new oil field to be developed 77 miles east of the isles.

Aberdeen-based EnQuest announced on Friday they had been cleared by the UK Department of Energy and Climate Change to go ahead with the £4 billion Kraken field in the North Sea’s East Shetland Basin.

The company will drill 25 wells to access two neighbouring fields, Kraken and Kraken North, that will be tied back to a floating, production, storage and offloading vessel (FPSO).

The field holds an estimated 137 billion barrels of heavy oil that will be extracted at 50,000 barrels a day over 25 years, with first production expected in 2016 or 2017.

Lerwick Port Authority chief executive Sandra Laurenson said she hoped the company would use the harbour during the construction phase.

“I am sure we are in a good geographical position to offer support and for handling any of the kit that is required for the placing and the mooring of the FPSO,” she said.

“This is the kind of work we are seeing more of in Lerwick because of how wells are developed these days.”

Northern isles MP and Scottish secretary Alistair Carmichael welcomed the decision, which he called a “vote of confidence” in the oil industry and the North Sea by the UK government.

The government has awarded two £800 million ‘ultra heavy oil’ tax allowances to the firm for what will be the largest investment in the North Sea this year.

The construction phase is expected to create roughly 20,000 jobs, with a further 1,000 during its quarter century lifespan.

“The North Sea oil is a crucial part of the national economy, and very important to Orkney and Shetland,” Carmichael said.

Chancellor of the Exchequer George Osborne said it was evidence that its efforts to create a competitive tax regime to get the most oil and gas out of the North Sea were working.

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Scottish energy minister Fergus Ewing said it demonstrated the faith that the oil and gas industry had in the future of the North Sea as an oil producing province.

EnQuest chief executive Amjad Bseisu said companies like his were the future of the North Sea.

“It is only by combining our skills and expertise with fiscal incentives, such as heavy oil allowances, that really substantial projects like Kraken are possible,” he said.

EnQuest has a 60 per cent interest in Kraken. Its partners in the development are Cairn Energy and First Oil.

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