North Sea oil project inching closer to FID as FEED work moves forward on schedule

UK-headquartered Jersey Oil & Gas (JOG) has outlined the progress made in putting all the requirements in place to sanction the HitecVision-backed NEO Energy’s redevelopment project, which is said to be the third largest pre-development field on the UK Continental Shelf (UKCS).

As Jersey’s primary goal since taking over sole ownership in 2021 was to secure the means and the finance to move the Greater Buchan Area (GBA) project forward into the development phase of activities, the farm-out deals with NEO Energy and Serica Energy enabled the firm to do just that. 

Closing out the selection of the GBA development solution and picking a floating production, storage, and offloading (FPSO) vessel enabled the Buchan redevelopment project to continue to make good progress. The partners in the project are NEO Energy (50%, operator), Serica Energy (UK) Limited (30%), and JOG (20%).

According to Jersey, the completion of the necessary pre-sanction front-end engineering and design (FEED) work, being carried out by Apollo, is on track and the first offshore survey vessel mobilization occurred earlier this month to obtain the geophysical and geotechnical data required to finalize the subsea and drilling rig contract tendering process and inform the FPSO mooring design.

With the future connection of the FPSO to one of the anticipated floating wind power developments in the area in mind, the company explains that engagement is ongoing with the companies that were awarded acreage in the Innovation and Targeted Oil & Gas (INTOG) licensing round conducted by Crown Estate Scotland in 2023. 

Furthermore, Jersey underlines that securing a source of green power feeds into the post-start-up electrification plan for the FPSO and does not defer the target date for the first oil. The draft Buchan field development plan was submitted to the North Sea Transition Authority (NSTA) in December 2023.

In addition, the environmental statement was handed over to the UK’s offshore regulator at the beginning of 2024 for the environment and decommissioning. These submissions, subject to project sanction from the joint venture partners, are said to pave the way for obtaining the necessary regulatory approvals for the Buchan redevelopment project in the second half of 2024.

Andrew Benitz, Jersey’s Chief Executive Officer, commented: “JOG had an exceptional 2023 and we are delighted to have NEO and Serica as our partners on the Greater Buchan Area, which is one of the largest and most exciting developments of homegrown energy in the UK North Sea. 

“Together with our joint venture partners and support from our shareholders we have delivered an investment opportunity that is expected to support over 1,000 jobs across many parts of the UK supply chain, provide private investment of around £900 million into the UK economy and generate hundreds of millions in forecast UK tax receipts.” 

While the final investment decision (FID) is still pending, the first production is anticipated in late 2026 and peak production rates are expected to be around 35,000 barrels per day. With the gross development costs estimated at £850-950 million, the Buchan field will be developed through the use of up to five subsea production wells, supported by two water injection wells tied back to the FPSO Western Isles, which will be modified to be electrification-ready before redeployment to the field.

As fiscal uncertainty presents a challenge for the UK oil and gas industry’s efforts to maximize the production of homegrown resources, Offshore Energies UK has stepped up its activities to engage with the leaders of all parties. Jersey claims that these efforts are being undertaken to ensure the benefits of domestic energy production are understood and realized.

Benitz added: “Multiple recent fiscal hikes, compounded by potentially further fiscal uncertainty associated with the forthcoming election, are weighing heavily on UK oil and gas industry. With hydrocarbon imports into the UK at a record high last year, the spotlight will inevitably refocus on domestic supply from the North Sea. 

“We remain confident that any new government will realise that the industry is truly its best partner and enabler of the energy transition and that it must support private sector investment into all forms of homegrown energy. Whilst demand for oil and gas remains, homegrown energy provides the most effective, lowest carbon option and provides an economic bridge to the future.”