New North Sea oil and gas development "will increase UK production by 2%"

The Fram field, off the north east coast of Scotland, could add 2% to the UK's daily energy production, according to Government estimates. The field, which will be operated by Royal Dutch Shell's UK arm, is a joint venture between Shell and Exxon Mobil (Esso). The companies are expected to recover an average of 35,000 barrels of oil equivalent from the field per day once production starts.

"The durability of oil production in the North Sea constantly confounds expectation," Energy Minister John Hayes said. "It is a tribute to the high-tech advances and expertise of British industry, which has constantly pushed the boundaries of what can be produced. Fram itself will add around two per cent to our oil and gas production - securing jobs, creating revenue and adding to our security of supply."

Shell's development plan contains eight production wells, one production water re-injection well, two subsea drill centres and a subsea flowline bundle. Fuel produced will be exported using floating, production, storage and off-loading (FPSO) technology and will be exported via Shell and Esso's existing gas and liquid lines.

Glen Cayley, Shell vice president technical Europe, said that the company was working to achieve first production within the next three years.

"This is an exciting announcement for Shell and a positive demonstration of our commitment to technological innovation as we pursue field developments in the UK," he said. "Large developments such as Fram will stimulate supply chain and employment opportunities in this latest phase of development for the UK continental shelf."

The approval comes after a raft of announcements by the Government in recent months aimed at encouraging long-term investment in North Sea oil and gas resources. Last month the Treasury announced a new tax break for operators of older "brown field" oil and gas fields, following the introduction or extension of allowances for small fields, large shallow-water gas fields and fields in the West of Scotland earlier this year.

A Treasury consultation on the creating of Decommissioning Relief Deeds, which will contractually set out the levels of relief that companies will be entitled to claim once a facility is decommissioned, closed earlier this month. Further details of the scheme, including a draft Deed, are expected to be published for consultation later this year.