Maersk Oil said on Wednesday it would seek regulatory permission to shut its Janice installation, which produces around 7,000 barrels per day (bpd) from three UK North Sea oilfields, as the Danish firm reviews its operations due to falling oil prices. Crude prices have dropped by more than half from year-ago levels, hammering oil producers. But while operators have announced plans to cut jobs and sell oilfields, few have flagged a shutdown in operations.
Maersk Oil said it would approach Britain’s Oil and Gas Authority for approval to stop production from the second or third quarter of 2016. As part of the regulatory procedure, Maersk Oil may submit proposals to tie one or some of the fields back to other installations to produce again.
“In terms of what happens to the fields, that will be covered by our proposals in the plan that we submit to the UK Oil & Gas Authority,” Maersk Oil said. “Permission to cease production would then lead to a decommissioning program for the Janice FPU [floating production unit] and this would be submitted to the regulatory authorities.”
Maersk Oil has already cut 200 jobs at its Copenhagen headquarters and in its Qatar and UK businesses and now more could go in the UK as a consequence of the review. “All options will be explored through the UK-led consultation process to minimize impact on job positions, but it is possible that an estimated 200 roles may be affected,” Maersk Oil Chief Operating Officer Gretchen Watkins said. Maersk Oil, a unit of shipping and oil group A.P. Moller-Maersk, also said it is considering a move to “three weeks on, three weeks off” offshore rotation to be implemented in the second quarter of 2016 in the UK.
The Maersk Group said earlier this month a variety of targets for its oil-related units including also Maersk Drilling, APM Terminals and APM Shipping Services would be replaced due to the “volatile environment” caused by oil prices. Brent crude traded at $43.21 a barrel on Wednesday, compared to around $100 a barrel in August last year before prices began their steep slide.