A consortium of oil companies comprised of BP plc (BP), Royal Dutch Shell (RDS-B), Chevron (CVX), and Conoco Philips (COP) announced Thursday that they would begin fresh drilling in a remote area off the coast of the Shetland Islands, North of Scotland.
So far, the project-dubbed an “appraisal program”-consists of five wells costing around $100 million apiece to be drilled over the next two years. In the event of favorable results, however, seven more wells could be drilled, pushing the costs past the $1 billion mark.
The project is being called Greater Clair, and if it proves successful, it is slated to become a major area of investment. The underwater field, located 45 miles west of the Shetland Islands, measures about 25 miles in length and is believed to contain about 8 billion barrels of oil.
Greater Clair is an extension of extraction and production on the part of the consortium, some of which is already taking place on $7 billion of platforms to the northwest in an area called Clair Ridge.
British oil fields have traditionally been located to the South and East of this cold, lonely area, in the North Sea, where production has dropped off drastically in recent years, a fact that the British government hopes to change with new exploratory drilling in larger, if not harder to reach fields.
Indeed, the Greater Clair field is located in an environmentally sensitive area and drilling platforms must withstand waves as large as 60 feet. So far, there appears to be little apprehension among company or government officials that anything like a repeat of what took place in the Gulf of Mexico could happen again, even though BP is the lead player in the consortium, and along with its partners plans to invest over $12 billion into the area over the next few years.
At today’s high prices, the first three phases of projected drilling for Greater Clair could rake in about $100 billion.