Friday 17 November 2023

Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company ‎focused on the UK Continental Shelf region of the North Sea, is pleased to announce that the owners of the Buchan field licences, JOG and NEO Energy ("NEO"), have executed agreements to acquire the "Western Isles" floating production, storage and offloading ("FPSO") vessel. The FPSO will be used as the processing facility for the planned redevelopment of the Buchan field.

Highlights:

§ Western Isles FPSO, which has been operational since 2017, acquired for planned redevelopment of the Buchan field - high-quality vessel that is currently operating in the UK North Sea

§ JOG to receive a $9.4 million cash payment from NEO pursuant to the terms of the farm-out transaction announced on 6 April 2023 - the milestone payment in respect of finalisation of the Greater Buchan Area ("GBA") development solution

§ Work progressing at pace on Front-End Engineering and Design ("FEED") activities in order to facilitate Field Development Plan ("FDP") approval in 2024

Dana posts solid profits, eyes Western Isles boost | Upstream Online

Andrew Benitz, CEO of Jersey Oil & Gas, commented:

"Finalising the terms for the joint venture partners to acquire the FPSO, which is less than eight years old and requires relatively modest adaptation for our planned GBA redevelopment, is a tremendous milestone for the project.

"Re-using existing high-quality infrastructure and modifying it to be electrification-ready is exactly in line with our stated low carbon strategy and the net zero related objectives of the industry. The vessel is the cornerstone to completing the engineering work required to facilitate FDP approval for the Buchan redevelopment next year."

GBA Development Solution

In July 2023, it was announced that the preferred solution for the redevelopment of the Greater Buchan Area ("GBA") was via the redeployment of an FPSO. This solution benefits from being both the lowest cost development option and the one that results in the lowest full-cycle carbon footprint of all the potential options evaluated. This conclusion was driven by the ability to re-use existing infrastructure that can be located directly at the Buchan field and, with limited modifications, make the FPSO "electrification-ready" upon its redeployment. This will enable the vessel to have the potential to be connected to one of the anticipated third-party floating wind power developments that are intended to be located in close proximity to the GBA following the recent Innovation and Targeted Oil & Gas ("INTOG") licence awards made by Crown Estate Scotland.

Importantly, the preferred development solution aligns with the North Sea Transition Authority's ("NSTA") obligations to maximise the economic recovery of reserves and assist with achieving the UK government's net zero target. Consequently, the NSTA issued a letter confirming it had no objections to the Concept Select Report submitted in support of the Buchan re-development programme utilising the redeployment of the Western Isles FPSO.

FPSO Acquisition

The Western Isles FPSO that is being acquired by NEO on behalf of the Buchan field partners is currently operating in the UK North Sea and is owned by Dana Petroleum (E&P) Limited (76.9188%), as operator, and NEO (23.0812%). The FPSO is a high-quality vessel that has been in operation since early 2017 and is scheduled to come off-station as part of the planned cessation of production of the Western Isles fields around the second half of 2024. The operational capabilities of the vessel, along with its relatively limited service-life to date, make the FPSO an excellent fit for use on the planned redevelopment of the Buchan field.

Following handover of the vessel to NEO, as the Buchan field operator, it is planned for a relatively modest work programme to be undertaken in order to prepare the FPSO for redeployment on Buchan. The works will essentially involve the installation of water injection booster pumps, produced water injection modifications and preparation of the vessel for future electrification. These modifications are expected to be completed by early 2026, such that the vessel can be deployed to the field location and hooked up ready for the anticipated start-up of production in late 2026.

Agreements have been executed to acquire the 76.9188% interest in the vessel not currently owned by NEO. The main terms of the acquisition commit the Buchan field partners to acquire the vessel upon the approval of the Buchan FDP. Prior to this milestone being achieved, the Buchan partners are responsible for the costs of storing the vessel from the date of handover, which is anticipated to be in the second half of 2024. The FPSO acquisition and associated costs forms part of the previously announced farm-out carry arrangements agreed between NEO and JOG.

Related Oil & Gas Projects

• Buchan