The Buchan oil field is a significant redevelopment opportunity, having ceased production prematurely due to safety concerns with its aging production facilities which were removed by the previous operator
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company focused on the UK Continental Shelf (“UKCS”) region of the North Sea, announces that Equinor has elected not to exercise the three month option which was granted by the Company over a 50% equity interest in respect of Blocks 20/5a and 21/1a (the “Buchan Blocks”), which contain the Buchan oil field and the J2 oil discovery.
The Buchan oil field is a significant redevelopment opportunity, having ceased production prematurely due to safety concerns with its aging production facilities which were removed by the previous operator. A wealth of subsurface data exists on the field, with two major independent studies concluding that the field has remaining mean case recoverable volumes of approximately 80 million barrels of oil equivalent (“mmboe”). Buchan has historically produced almost entirely through only natural depletion and the deployment of modern technologies and practices are expected by JOG’s management to enable the field to produce for potentially in excess of a further twenty years.
Buchan will form the hub for JOG’s Greater Buchan Area (“GBA”) development plans. In close proximity are the JOG owned J2 and Glenn oil discoveries and the Equinor operated Verbier oil discovery, which represent attractive potential tie-back opportunities to the Buchan hub. In aggregate, JOG internal estimates indicate that some 144 mmboe of gross recoverable resources can be commercially produced through the Buchan hub, which would make it the largest new area hub in the UK Central North Sea since Golden Eagle. Additionally, within the catchment area of the GBA, there is significant upside potential to tie in additional third party discovered resources and any further GBA exploration upside.
Equinor will continue its efforts to mature and assess the opportunities in the adjacent Equinor operated P.2170 (Verbier) licence, working closely with JOG as part of the overall Greater Buchan Area Plan to maximise economic recovery in the area.
JOG will remain as 100% licence holder and operator of blocks 20/5a and 21/1a and has now commenced the concept appraisal and selection phase activities of the GBA development.
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
“Jersey Oil and Gas continues to enjoy a strong collaborative working relationship with Equinor that began by bringing them into P2170 as a farm-in partner in 2016. It was as a result of this collaboration that we offered them, at this early stage of the project, a 90 day opportunity to participate in our Greater Buchan Area plans. Their decision not to exercise the option provides JOG with greater flexibility, control and the full value potential of this very exciting new area development project, which based on our estimates of discovered oil volumes has the potential to be the largest new area hub in the UK Central North Sea since Golden Eagle.
“We have initiated the Appraise and Select phases of our Field Development Plan. As we progress to define and select the best development concept, we will consider farm-outs for value to industry partners prior to submitting FDP in 2022.”
Source: Company Press Release