Proactive Investors - Jersey Oil and Gas PLC (LON:JOG) has finalised the development solution for the Greater Buchan Area (GBA), determining that the redeployment of a flotating production, storage and offloading (FPSO) vessel will provide optimal cost effectiveness and minimal carbon footprint.
This is driven by the ability to reuse existing infrastructure that can be located directly at the Buchan field and, with limited modifications, make the FPSO electrification-ready upon its redeployment.
An electrified FSPO could potentially connect with one of the anticipated floating wind power projects in close proximity to the GBA. These projects stem from the recent Innovation and Targeted Oil & Gas license awards granted by Crown Estate Scotland.
The North Sea Transition Authority (NSTA) has completed its review of the selected development solution and has issued a letter confirming it has no objections to the Concept Select Report submitted to support the Buchan redevelopment programme.
Jersey Oil and Gas’ development solution aligns with the NSTA's obligations to maximise the economic recovery of reserves and assist with achieving the UK government's net-zero target.
Total capital expenditure for the Buchan field redevelopment, including the cost of acquiring the FPSO, is estimated at US$900mln (£708mln).
This estimation will be further evaluated and refined in collaboration with NEO Energy as part of the front-end engineering and design process and contract tendering activities preceding the finalisation of the field development plan.
Following the recent farm-out transaction with NEO, Jersey Oil and Gas holds a 50% working interest in the GBA licenses.
Through the expenditure carry arrangements established with NEO, Jersey Oil and Gas will be carried for 12.5% of the Buchan field redevelopment costs, equivalent to a 1.25 carry ratio.
The aim is for the AIM-listed company to ultimately retain a fully carried 20-25% interest in the Buchan redevelopment.
Jersey Oil and Gas and NEO have reached an agreement on the key commercial terms for the proposed acquisition of an existing FPSO.