Maersk Oil to Shutter Tyra Offshore Facilities

File image courtesy Maersk

By MarEx 2016-12-30 21:38:56

On Friday, Maersk Oil announced that it will close its Tyra gas production and processing facilities in the Danish North Sea, effective October 1, 2018.

Despite more than $140 million spent reinforcing the Tyra structures, Maersk says that continued production would be unsafe due to new knowledge on storm wave impact, combined with geologic subsidence which reduces the platform's height over the water. Recent research into extreme waves and a number of dangerous incidents, including last year's fatal incident on the COSL Innovator, have led to calls within the industry for a review of design practices.

The Tyra East processing platform collects the production of the Tyra West, Tyra Southeast, Valdemar, Roar, Svend, Harald, Lulita, Trym, Gorm, Dan and Halfdan facilities; all together, Tyra handles all of the gas production of the Danish Underground Consortium, which makes up about 90 percent of Denmark's total gas output.

The Tyra field's production peaked in 2004 at 550 million cubic feet per day, but it has fallen gradually to just 150 million cubic feet (as of 2015), reducing its economic viability. Maersk Oil has previously said that the Tyra facilities' maintenance and renewal was a key priority, and it has made significant investments in the field, including the completion of the Tyra Southeast platform in 2015. However, on Thursday the firm said that full recovery of the field's resources was no longer economically viable, and it will reallocate its resources towards planning for decommissioning. 

The news follows the announcement of the end of Maersk Oil's production license at the Al-Shaheen field in Qatar. If both Tyra and Al-Shaheen are subtracted from Maersk Oil's total production, it would reduce the firm's output by roughly one third (based on 2015 numbers and before accounting for new assets coming online). As recently as four years ago, Al-Shaheen and Tyra were "the cornerstone of Maersk Oil's business," said Jakob Thomasen, Maersk Oil's CEO, in a 2012 press statement. 

Maersk Oil has been cutting back on overhead, staffing levels and exploration activity throughout 2016, reflecting the broader downturn in the oil and gas industry. Maersk Group announced plans to spin off Maersk Oil in September, and as of November it was said to be in talks with DONG Energy about merging the two firms’ petroleum divisions. Inside sources say that the negotiations ended mid-December when Maersk and DONG failed to reach an agreement on price.