Apache moves to ease fears over rapid Forties shutdown

14/07/2023

Apache has moved to ease concerns that its Forties field could cease production by 2026, saying it is a date “we do not view as likely or realistic”.

Court papers reported yesterday suggested that the operator was planning to bring forward the shut down of the Forties field by 11 years amid a £200million spending cull.

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The US company, which took over the operation from BP in 2003 and recently announced plans to end UK drilling, was aiming to end the field’s production over the next three years, according to the documents.

However, last night Apache said the date would likely be later and that the details in the court documents were the result of a complex calculation related to decommissioning.

“Assertions in the media that Apache has willingly pulled forward COP to 2026 are false and a mischaracterisation of the legal dispute,” a spokeswoman said.

“The 2026 date is the result of applying a prescribed inflation rate to decommissioning costs, as mandated by the decommissioning security agreement (DSA) with Exxon, BP, Shell and NEO. 

“The inflation rate that we are required to use has costs increasing by nearly 20% between 2022 and 2024, and we think that is unrealistic. The Offshore Energy UK industry task force recently recognized that such inflation assumptions result in unrealistically high rates and recommended revisions to the standard DSA. 

“Apache supports the new recommendations given the current rate and inflated costs has had the effect of artificially pulling the expected cessation of production (COP) date to 2026, a date we do not view as likely or realistic. 

“Apache has requested amendments in the Forties DSA with BP, Exxon, Shell, and NEO, which would push the COP date assumed in the model back to 2030 or after.”

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