Economic Report 2013

fields and high pressure, high temperature field allowances, which have enabled investors to take a fresh look at the economic viability of projects on the UKCS. The tax relief to support large shallow water gas fields provided the Cygnus partners with the certainty and confidence to proceed with the project which was sanctioned in August 2012. In due course, production from Cygnus will generate substantial tax revenues for the Exchequer, as well as contributing significantly to the balance of payments, security of supply and job creation. GDF SUEZ E&P UK believes that it is important that the right investment and fiscal regime exists to help move potential new projects through to their development. Leading edge geophysics and a successful appraisal programme have been central to the progress of Cygnus since GDF SUEZ E&P UK

became operator in 2002. The company has transformed a small discovery into the largest gas development in the SNS during the last 25 years. Cygnus also faces technical challenges because of its shallow water location. This limits the number of vessels that can work in such water depths which in turn affects the weight and size of the platforms. In deeper water, a number of these platforms could be combined. The large areal extent means that a minimum of ten long wells (up to 18,000 feet) with horizontal sections (up to 3,500 feet) have to be drilled to reach the multiple reservoirs. By drawing on international knowledge within the organisation, applying bespoke drilling techniques and revitalising existing infrastructure, GDF SUEZ E&P UK aims to ensure that Cygnus is a North Sea success story set to secure future energy supplies.

Figure 27: Cygnus Milestones

• 1988 and 1989: Blocks including the Cygnus field were drilled by other operators, but were not pursued because initial evaluation suggested a poor quality reservoir • 2002: GDF SUEZ E&P UK acquired the licence for the blocks • 2003: The appraisal programme began with the first 3D seismic survey in the SNS using what was then new long cable technology • 2006: First appraisal well drilled • 2009: Plans were drawn up for a relatively simple development; however, other parts of the field showed much better reservoir quality. Two further appraisal wells were drilled. • 2010: Another two appraisal wells drilled, confirming a westerly extension with good quality reservoir delivering high flow rates • 2011: Extended development concept for Cygnus selected • July 2012: Shallow water gas field tax allowance introduced by HM Treasury • August 2012: Project sanctioned • September 2012: The Chancellor of the Exchequer, George Osborne, visited Heerema yard in Hartlepool for ceremonial contract signing

• December 2012: First steel for the project cut at Heerema, Hartlepool • May 2013: First steel cut for the four jackets at Burntisland Fabricators, Fife

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ECONOMIC REPORT 2013