Jersey Oil & Gas, an independent upstream oil and gas company ‎focused on the UK Continental Shelf region of the North Sea, today announced that the North Sea Transition Authority has approved an extension to the Second Term of the P2170 "Verbier" licence.

Further to the recently announced extension of the P2498 "Buchan" licence, the Second Term of the P2170 licence has been extended by three years to 29 August 2026. The extension was requested in order to provide the licensees with the time required to prepare a Field Development Plan for the Verbier discovery, as part of a phased Greater Buchan Area ("GBA") development plan. The first phase of the planned GBA work programme involves re-development of the Buchan field, with the start-up of production targeted for 2026.

GBA development solution

Jersey Oil & Gas has finalised the Greater Buchan Area ('GBA') development solution.

Highlights

• Redeployment of a Floating, Production, Storage and Offloading ('FPSO') vessel selected as the preferred GBA development solution - lowest cost and lowest full-cycle carbon footprint option
• The North Sea Transition Authority ('NSTA') has completed its review of the selected development solution
• Key commercial terms agreed for the potential acquisition of a high-quality FPSO, subject to negotiation and execution of fully termed agreements

JOG and NEO, as the incoming operator of the GBA licences, have determined that the preferred development solution is 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 is 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 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.

The preferred 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. The NSTA has issued a letter confirming it has no objections to the Concept Select Report submitted to support the Buchan re-development programme.  

With the GBA development solution now identified, work is progressing on the engineering studies that are required prior to submission of the development plan in 2024. The Company estimates that the total capital expenditure for the Buchan field re-development, including the cost of acquiring the FPSO, will be in the region of $900 million (gross cost). This estimate will be assessed and refined with NEO as part of completing the Front End Engineering and Design and contract tendering activities that precede Field Development Plan ('FDP') finalisation.

Following the recently completed farm-out transaction with NEO, the Company has a 50% working interest in the GBA licences. Through the expenditure carry arrangements agreed with NEO, JOG will be carried for 12.5% of the Buchan field re-development costs (equivalent to a 1.25 carry ratio).  In line with JOG's stated strategy to farm-out a further interest in the GBA licences, it is targeted for the Company to ultimately retain a fully carried 20-25% interest in the Buchan re-development.

Further information on the core components of the development programme and execution schedule will be provided as the work progresses. The Company is also planning to commission an independent reserves evaluation as part of its end of year financial reporting process.

Proposed FPSO Acquisition

In tandem with the specification of the preferred development solution, the GBA partners have agreed the key commercial terms for the proposed acquisition of an existing FPSO. The proposed acquisition is conditional on the negotiation and execution of relevant transaction agreements, including a sale and purchase agreement. The acquisition would form part of the carry arrangements agreed between NEO and JOG.

KeyFacts Energy: Jersey Oil and Gas UK country profile