A key part of the jigsaw is in place for one of the biggest potential new oil and gas developments in the UK North Sea.
The two partners in the £700 million-plus Greater Buchan Area (GBA) project have decided the best option for developing the assets is to use a floating production storage and offloading (FPSO) vessel.
It would be linked to one of the many floating wind farms planned for the North Sea, making the Moray Forth fields “electrification ready”, London-listed Jersey Oil and Gas said today.
Jersey and Neo in GBA partnership
Shares in Jersey rose nearly 7% after it said total capital expenditure for GBA is likely to come in around £707m.
This includes the cost of acquiring an FPSO. Key commercial terms have already been agreed for a “proposed acquisition” of a suitable but unnamed vessel.
Jersey recently announced the completion of a farm-out deal for GBA, which comprises the Buchan oilfield – previously produced by BP and Repsol Sinopec Resources UK – and Verbier discovery.
The transaction saw Neo Energy assume operatorship of the development.
Jersey and Neo, which is backed by Norwegian private equity firm HitecVision, now each have a 50% stake in the licences.
162 million-barrel bounty
Another farm-out is planned, with the aim of ultimately leaving Jersey with a 20-25% interest.
The assets are estimated to hold potentially recoverable resources totalling 162 million barrels of oil equivalent.
Jersey said the decision to use an FPSO was driven by “the ability to reuse existing infrastructure that can be located directly at the Buchan field”.
It added: “The preferred development solution aligns with the NSTA’s (North Sea Transition Authority’s) obligations to maximise the economic recovery of reserves and assist with achieving the UK Government’s net-zero target. ”
NSTA has issued a letter confirming it has no objections to the use of an FPSO.
Meanwhile, industry experts are already trying to second-guess which vessel may be deployed.
The EnQuest Producer FPSO remains docked in the Cromarty Firth, not far from the Buchan site. EnQuest said in 2021 there was “significant interest” in the vessel.
Next steps towards GBA production
With the “Buchan area solution” now identified, work is progressing on engineering studies ahead of a field development plan (FDP) being submitted in 2024.
Jersey said the £707m gross cost would be “assessed and refined” by Neo as part of front-end engineering and design work and contract tendering in advance of the FDP.
the company’s chief executive, Andrew Benitz, added: “We are delighted to have finalised the GBA development solution and agreed key commercial terms for securing an FPSO.
“This marks a major step forward for the project, not least by providing the GBA partners with a solution that minimises the overall carbon footprint of the project and provides the opportunity to be an early participant in the UK oil and gas industry’s offshore electrification plans.
“We look forward to working closely with Neo, as the incoming operator of the GBA licences, on preparing the overall Buchan field redevelopment plan that is anticipated to be submitted to the NSTA during the first half of 2024.”
Buchan restart slated for 2026
Buchan came on stream in 1981, but production halted in 2017 because the Buchan Alpha platform was unsafe and had to be removed by then-operator Repsol Sinopec.
Jersey has been working on plans for the area for several years, but extended its development timeline in late 2021 to allow for further studies on electrification.
A restart of production from Buchan is targeted for 2026.
Jersey also announced the NSTA has granted a three-year extension to the Verbier discovery licence, P2170, to August 29, 2026.