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UK's benchmark oilfield Buzzard, once unreliable, pumps more in 2016

Published 09/06/2016, 11:34
Updated 09/06/2016, 11:40
© Reuters.  UK's benchmark oilfield Buzzard, once unreliable, pumps more in 2016
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By Alex Lawler

LONDON (Reuters) - Britain's North Sea Buzzard oilfield, which helps price global crude exports and in the past was beset by unplanned outages, has had a smooth year, industry sources said, boosting supply of crude that underpins the Brent benchmark.

Unplanned shutdowns at the British field can boost Brent prices and lead to higher premiums of Brent futures for immediate delivery - leading to price volatility.

Buzzard is operated by Nexen, a unit of Chinese state company CNOOC. Other field partners are Suncor Energy Inc and Royal Dutch Shell (LON:RDSa) following its purchase of BG Group.

Last year, Buzzard's production averaged 163,000 barrels per day (bpd) according to UK government data. So far this year, the average has risen to about 173,000 bpd, even though output has slowed in June because of a Forties pipeline flow restriction, sources said.

"There hasn't been a zero production day this year," said one of the sources who declined to be identified. "It's been quite a success story."

The lack of outages shows that efforts by the field operator to improve reliability are working. Nexen in 2014 detailed a number of steps it had taken in order to achieve this, and CNOOC said it was expecting to boost supplies from its UK assets.

Buzzard pumps less than 0.2 percent of daily world oil supply but it is the largest field contributing to Forties blend, the most important of the four North Sea crude grades underpinning the Brent benchmark.

At the centre of the benchmark used to price two thirds of the world's oil, it has a bigger impact on pricing than its size would otherwise justify.

More reliable output at Buzzard is helping lead to more stable exports of Forties crude blend. In previous years cargoes often faced delays in their loading dates.

In 2015, Reuters reported only two unplanned shutdowns or production glitches at Buzzard. In 2014 when there were at least six.

A planned shutdown in September 2016 at Buzzard will weigh on full-year average output. The maintenance is set to last more than 30 days, trade sources said.

Nexen declined to comment on Buzzard's performance on Thursday.

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