Jersey’s new UK acreage opportunity to establish ‘major new area hub development’
Oil and gas company Jersey Oil & Gas (JOG) has been awarded significant acreage in the UK North Sea, containing over 100 million barrels of discovered oil, including the Buchan oil field.
Jersey said on Monday it had been awarded 100% working interests and operatorship of three blocks in the OGA’s 31st Supplementary Offshore Licensing Round. This Greater Buchan Area (GBA) acreage awarded to JOG includes the Buchan oil field and the J2 (well 20/5a-10Y) oil discovery.
The acreage awarded is contiguous with JOG’s existing interest in Licence P2170 (Blocks 20/5b and 21/1d) which contains the 2017 Verbier (J62-J64) oil discovery with a low case operator estimate of approximately 25 mmboe of discovered resource in addition to significant identified prospective resources, in which JOG holds an 18% working interest alongside the operator, Equinor UK Limited (70%), and co-venturer CIECO V&C (UK) Limited (12%).
According to JOG, together with its interest in the Verbier discovery, the new GBA acreage provides the company with a significant opportunity to potentially establish and operate a future major new area development to access more than 100 mmboe of discovered mean resources plus in excess of 300 mmboe of identified mean prospective resources that are estimated to be present in the GBA.
FDP for ‘major new area hub development’
The company will now start work to progress a field development plan (FDP) seeking, subject to funding, to deliver a potential JOG-operated major new area hub development in the medium term in line with the OGA’s Maximum Economic Recovery (MER) strategy.
JOG stated it is currently fully funded to compile and submit the requisite FDP. This proposed new area hub will be planned to incorporate the redevelopment of the Buchan oil field, together with the J2 oil discovery, with the potential to include the development of the Verbier discovery as well as other discovered and yet-to-be-found resources in the GBA.
First oil, subject to funding, will be targeted for 2024. JOG will evaluate and determine the optimal sustainable development plan, designed to deliver future phased and extended plateau production.
The Buchan oil field was discovered by BP in the mid-1970s and came on stream in 1981. Production continued until May 2017, when the Buchan Alpha platform was no longer compliant with the current Safety Case, by which point a total of 148 million barrels (MMbbls) had been produced. Buchan oil is a light 33.5° API oil with low GOR (285 scf/bbl). JOG estimates that over 80 million barrels of recoverable oil volumes remain to be produced from the field.
Furthermore, Equinor and JOG have agreed and entered into a three-month option agreement under which Equinor has been granted an option over a 50% equity interest in respect of Blocks 20/5d and 21/1a (the Buchan Blocks), which contain the Buchan oil field and J2 oil discovery.
Should the option be exercised, JOG will act as License Operator in respect of the Buchan Blocks and Equinor will reimburse JOG for its 50% share of costs in relation to the license applications.
‘The most significant event since inception’
Andrew Benitz, CEO of Jersey Oil & Gas, commented: “We are delighted to announce this transformational event. Prior to these awards, JOG’s net share of discovered resources in Verbier were estimated at 4.5 mmboe.
“Today’s awards add an estimated 105 mmboe of discovered resources net to JOG, in addition to a material uplift in new prospective resources. This represents a highly significant value enhancing milestone for our shareholders comprising 100% equity interests and operatorship of key development ready assets with the potential to create a major new area hub within the Greater Buchan Area.
“These awards are the kind of value creating opportunities available to nimble independent companies operating in the North Sea today and stem from an intensive two-year work effort behind the scenes by JOG to prepare today’s winning applications. By way of low-risk accumulation of discovered resource volumes, this is by far the most significant event for JOG since its inception and we are excited to start work on this new project immediately.
“We are also pleased to enter into an option agreement with Equinor, which serves to demonstrate JOG’s efforts to successfully collaborate and continue to strengthen our working relationship with Equinor as Operator of Licence P2170.”