Neptune to invest over $1 bln in next five years to secure energy supplies for UK
Oil and gas company Neptune Energy will spend more than $1 billion over the next five years securing energy supplies for the UK and speeding the transition to net zero.
Neptune currently operates around 11 per cent of the UK’s gas supply from fields in the UK’s Southern North Sea and the Norwegian North Sea. The company claims it is one of the UK’s lowest carbon producers, with the carbon intensity of its production at 1.7 kg CO2/boe compared with the industry average of 20 kg CO2/boe.
Following the publication of the Government’s British Energy Security Strategy, Neptune will accelerate investment to increase the energy supply to the UK. The UK government’s strategy was revealed in early April 2022, setting out how Great Britain will accelerate the deployment of wind, new nuclear, solar and hydrogen, whilst supporting the production of domestic oil and gas in the nearer term – which could see 95 per cent of electricity by 2030 being low carbon.
In the short term, Neptune is supporting energy security by doubling gas production from its Duva field in Norway to around 13 kboepd, which will supply enough gas to heat an additional 350,000 UK homes. Duva is a subsea installation with three oil producers and one gas producer tied back to the Neptune Energy-operated Gjøa semi-submersible platform. The gas is transported by pipeline to the UK’s St Fergus gas terminal.
Furthermore, Neptune is beginning infill drilling at its operated Cygnus field in the UK next month, with the 10th well due to go on stream in October and plans for an 11th well to be brought on stream next year, helping to maintain production from Cygnus and offset the natural decline.
The company noted it could supply even more energy if the UK’s Gas Safety Management Regulations are more closely aligned with European standards.
In the mid-term, Neptune is investing around $1 billion with its partners in the new Seagull development (Neptune 35 per cent), adding around 50 kboepd of production for the UK from 2023, using existing infrastructure to bring production forward quickly and efficiently. New infrastructure requirements have been minimised by the reuse of the Egret manifold tie-in point on the Heron cluster pipeline system and wash water line.
Seagull is a high pressure, high temperature (HPHT) development, on UK licence P1622, Block 22/29C. The development will be tied back to the ETAP CPF, partially using the existing subsea infrastructure.
The company is also investing a further $120 million with its partners to drill an appraisal well in the second half of this year at the Isabella prospect (Neptune 50 per cent) in the Central North Sea. Should it prove economic to develop, Neptune and its partners would invest a further $1 billion to bring the development on stream.
When it comes to long-term development options, the company is spending around $300 million in the next three years developing the Gjøa hub in Norway, which exports gas to the UK via the St Fergus terminal.
Neptune has also confirmed its interest in the UK Government’s plans for a new licensing round, focused on Neptune’s existing assets and core areas in the UK North Sea. In addition, Neptune is discussing with the North Sea Transition Authority an application for Pegasus West in the Southern North Sea, which would increase gas production via Cygnus.
The oil and gas company is investigating opportunities and future investment in the electrification of Cygnus and in carbon capture storage and hydrogen projects in the North Sea, supporting delivery of the UK’s net-zero targets.
Pete Jones, CEO of Neptune Energy, said: “Securing lower carbon energy supplies is a national priority for the UK and Neptune has an important role to play. The Government’s Energy Security Strategy gives clarity on the key role of the North Sea in providing this security and its importance in the energy transition.
“While the UK represents just 10 per cent of Neptune’s production, it is an important growth area for us, with investment options in the North Sea that will not only increase the UK’s energy security, but also support jobs and boost the supply chain.”
According to its statement, in the last three years, Neptune has spent more than $500 million securing energy supplies for the UK and has contributed more than $1.8 billion to UK GDP since 2018.