NEO Energy has selected an FPSO for the Greater Buchan Area oil redevelopment in the North Sea.
Partner Jersey Oil and Gas (AIM: JOG), which sold operatorship to NEO last month, also said the project will cost around $900m, including cost of acquiring the vessel.
NEO and Jersey have not disclosed which FPSO they intend to go after, but said they “have agreed the key commercial terms for the proposed acquisition of an existing FPSO”.
Jersey, which remains 50% partner, said the choice was driven by “re-use (of) existing infrastructure that can be located directly at the Buchan field”.
Buchan – a redevelopment of a former Repsol Sinopec field in the Moray Firth – is one of the largest pre-FID projects in the UK North Sea, with an estimated 162m barrels of oil equivalent (gross 2C).
FPSO selection
© Supplied by DCT MediaWith limited modifications, it added, the Floating Production Storage and Offloading (FPSO) vessel can be made “electrification-ready” upon redeployment.
That means the FPSO can be hooked up to floating wind developments intended to be close by to the Buchan area through the recent INTOG leasing round.
Industry regulator, the North Sea Transition Authority (NSTA), has issued a letter confirming it has no objections to the concept selection.
NEO and Jersey haven’t yet named which FPSO they may go after, and local selection has narrowed in recent months.
In April, the Voyageur Spirit FPSO which was long-docked at Kishorn on Scotland’s west coast, left for the Middle East ahead of a job off Cote D’Ivoire.
The formerly-named Hummingbird Spirit FPSO has been booked up by Ping Petroleum for the Avalon field, and renamed “Excalibur”.
However the EnQuest Producer FPSO remains docked in the Cromarty Firth, not far from the Buchan site.
EnQuest said in 2021 there was “significant interest” in the vessel.
Costs and contracts
With the Buchan area solution now identified, work is progressing on engineering studies ahead of a development plan being submitted in 2024.
The $900m gross cost will be assessed and refined by NEO Energy as part of Front End Engineering and Design (FEED) and contract tendering ahead of that field development plan being finalised.
Jersey-NEO
Jersey CEO Andrew Benitz said: “We are delighted to have finalised the GBA development solution and agreed key commercial terms for securing an FPSO for redeployment on the Buchan field.
“This marks a major step forward for the project, not least by providing the GBA partners with a solution that minimises the overall carbon footprint of the project and provides the opportunity to be an early participant in the UK oil and gas industry’s offshore electrification plans.
“We look forward to working closely with NEO, as the incoming operator of the GBA licences, on preparing the overall Buchan field re-development plan that is anticipated to be submitted to the NSTA during the first half of 2024.”
Buchan
Buchan came on stream in 1981, but production halted in 2017 because the Buchan Alpha platform was unsafe and had to be removed by then-operator Repsol Sinopec.
Jersey has been working on plans for the area for several years, but extended its development timeline in late 2021 to allow for further studies on electrification.
Last month, Jersey completed its farm out of 50% and operatorship of Buchan to NEO Energy, the UK’s fifth-largest producer.
As part of the deal, Jersey’s share of carry costs are capped at 12.5%.
Jersey also announced today that the NSTA has granted an extension to the Verbier discovery licence P2170, which is part of the Greater Buchan Area plan.
The three-year extension covers the licence to August 29, 2026.
Start up of production from Buchan is targeted for 2026.
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