May 22, 2017 / 9:30 AM / 7 months ago

New BP oil project breathes new life into North Sea

* BP starts production from Quad 204 field

* $5.7 bln project to reach production of 130,000 bpd

* Shell, Siccar Point partners in project

By Ron Bousso

LONDON, May 22 (Reuters) - BP has started production at an oilfield in the North Sea after a $5.7 billion redevelopment, one of the largest such projects there in recent years that will breathe new life into the ageing offshore basin.

The Quad 204 project in the western Shetland region, also knows as Schiehallion, is expected to ramp up production throughout 2017 to reach a level of 130,000 barrels per day, BP said in a statement.

The Schiehallion field was first developed in the mid-1990s. The 4.4 billion pound project, which was sanctioned in 2011, will unlock an estimated 450 million barrels of oil and gas, extending its life into 2035.

The upgrade includes the construction of a giant floating, production, storage and offloading (FPSO) vessel, the Glen Lyon, as well as a new network of wells and subsea facilities.

The field is operated by BP, which holds a 36 percent interest in it, while Royal Dutch Shell has a 55 percent interest and private equity-backed Siccar Point owns the remaining 10 percent.

For BP, the project is the third of seven projects it plans to launch this year as it seeks to increase its production by around 800,000 barrels of oil equivalent per day (boed) by the end of the decade.

The British company plans to double its North Sea production to 200,000 boed by 2020. The basin has enjoyed a strong boost in output in recent years, defying a deep slump in oil prices, as new projects are set to increase its production over the next two years to 1.2 million bpd. ($1 = 0.7707 pounds) (Reporting by Ron Bousso; Editing by Susan Fenton)

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