Progress on engineering plans for the redevelopment of the Greater Buchan Area (GBA) are gathering pace following selection of an FPSO.
In a half-year results update on Thursday, Jersey Oil and Gas (AIM:JOG) said it had worked with partner NEO Energy to finalise a plan and contracting strategy to move the Buchan project into the front end engineering and design (FEED) phase.
Buchan – a redevelopment of a former Repsol Sinopec field in the Moray Firth – is one of the largest pre-FID projects in the UK North Sea, with an estimated 162m barrels of oil equivalent (gross 2C).
Jersey sold a 50% working interest in the licences as part of a farm-out deal with NEO earlier in the year, which will see the latter take over operatorship of GBA.
The pair secured licence extensions from the North Sea Transition Authority (NSTA) in June, allowing for more time to prepare a field development plan (FDP) for the redevelopment, now planned for submission during the first half of 2024.
Jersey this week said the two have been working collaboratively to facilitate “a smooth transfer of operatorship” of the GBA licences and the associated subsurface and engineering work completed so far.
NEO has now established a project management team which includes JOG secondees to oversee the FEED activity. Work is now being initiated on well design, subsea and gas export infrastructure, as well as FPSO electrification, life extension and re-deployment.
The pair confirmed in July that they had selected an FPSO for the project and “agreed the key commercial terms”, though have yet to disclose the exact vessel.
The decision has been heavily influenced by the need for facilities that can be made “electrification-ready” upon redeployment.
At the time, they estimated total project costs of around $900 million, including the outlay for acquiring the vessel.
The company said it had also continued to liaise with offshore wind developers regarding power offtake, with the GBA development “offering the potential to be a component of the future Outer Moray Firth offshore wind electrification plans” being developed as part of the Innovation and Targeted Oil and Gas (INTOG) leasing process.
Preparation of an FDP is now “underway”, with submission to the NSTA targeted for the first half of 2024 for subsequent approval later in the year.
In addition, environmental impact assessments are being undertaken and consultation with the OPRED and statutory consultees is ongoing, ahead of submission of an Environmental Statement, being a precursor to FDP approval.
Nodding to future farm-out activity, Jersey said it remains “actively engaged” with other potential GBA partners with the ultimate goal of holding onto a 20-25% fully carried interest in the licence.
‘Pivotal’ period for Jersey
Without any production revenue, Jersey posted a pre-tax loss of £2.9m for the first half of the year, though holds a cash position of £5.6m.
CEO Andrew Benitz commented: “The first half of the year has been a pivotal period in the history of the company. With the farm-out to NEO Energy completed, the GBA development solution locked down and the licences covering the area extended, we now have a clear pathway to monetising the resource base we have built up over recent years.
“We are encouraged by the collaborative progress being made by NEO and look forward to finalising the acquisition agreements for the FPSO, creating additional value through securing further farm-outs and moving onwards with the various workstreams required to get to Field Development Plan approval next year.”
It follows a successful month for Hitec-backed NEO Energy, which also secured regulatory approval for its Affleck development.