BP BP Plc

By Sarah Kent 

BP PLC has begun production from one of the U.K.'s biggest new oil developments in decades, the company said Friday, completing a project seven years and billions of dollars in the making.

The huge Clair Ridge project, located in the North Sea, will give a boost to the U.K.'s oil sector, where production peaked around 2000 before going into years of decline.

It's the latest sign of a mini renaissance in the region's oil industry, as major divestment programs by big oil companies have attracted new players and investment. Meanwhile, giants like BP have turned their attention to the region west of the Shetland Islands -- a remote North Sea archipelago -- where the company's newest project is located.

Once thought too difficult to develop, it's now a key area of growth for the U.K. For instance, the Clair Ridge development is part of a field that was first discovered in 1977 -- an estimated 7 billion barrel whale that for years proved too challenging and costly to exploit.

It took until 2005 for the first project on the field to start producing, with the latest stage of development approved in 2011. BP and its partners -- Royal Dutch Shell PLC, Chevron Corp. and ConocoPhillips -- poured more than $5.8 billion into expanding the field's output.

Clair Ridge is expected to reach a production plateau at a peak of 120,000 barrels of oil a day and is designed to run for 40 years. The companies are currently evaluating the potential for a third project within the field to expand output even further.

It's BP's sixth new project to start production this year, the latest marker of the company's return to growth after years of retrenchment in the wake of its fatal blowout in the Gulf of Mexico. To pay for the 2010 disaster, which killed 11 people and caused the worst offshore oil spill in U.S. history, BP was forced to sell off billions of dollars of assets, shrinking its production.

But a string of new developments that started up over the past two years is reversing that trend, and BP is closing in on its ambition to regain its former size. The company's production averaged 3.6 million barrels a day in the first nine months of the year, up nearly 3% compared with the same period in 2017. Output will receive a further boost from its recent $10.5 billion acquisition of BHP Billiton Ltd's shale assets.

Still, new startups like Clair Ridge remain important to BP's ambition to deliver 900,000 barrels a day of new production between 2017 and 2021.

Write to Sarah Kent at sarah.kent@wsj.com

(END) Dow Jones Newswires

November 22, 2018 19:15 ET (00:15 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.