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Shell commissions new oil-production vessel in UK North Sea field

Royal Dutch Shell plans to build its first major oil-production vessel in the northern U.K. North Sea in almost three decades, in an effort to redevelop the Penguins oil and gas field, the company said Monday.

Shell believes the floating production, storage and offloading vessel will pump 45,000 barrels of oil equivalent a day from the Penguins field at its peak, and that it could break even on its investment even if oil prices slide below $40 a barrel.

Shell plans to drill eight new wells and tie them back to the FPSO after its current platform there, called the Brent Charlie, stops producing oil.

“We are unlocking development opportunities, with lower costs, in support of Shell’s transformation into a world class investment case,” said Andy Brown, Shell’s upstream director, in a written statement.

Shell said Irving, Texas-based engineering firm Fluor will build the FPSO.

The Penguins field, discovered in 1974, is beneath 540 feet of water about 150 miles north east of the Shetland Islands. In a joint venture, Shell and Exxon Mobil Corp. originally plowed the field in 2002.

U.K. regulators say crude production has fallen 88 percent in the more prolific eastern side of the Penguins field since 2004. Shell operates that field and the western end of the Penguins field.

Related: Shell backs away from new oil sands development

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