NEO, Jersey Oil to Fully Acquire FPSO for Buchan Field Redeployment

NEO Energy Group Ltd is acquiring full equity in the Western Isles floating, production, storage and offloading (FPSO) vessel from Dana Petroleum (E&P) Limited, which currently owns a 76.9188 percent interest in the FPSO.

NEO Energy said in a news release Friday that it intends to redeploy the FPSO at the Buchan field redevelopment in the central North Sea near the United Kingdom. The financial details of the acquisition were not disclosed.

Co-owner of the Buchan asset Jersey Oil & Gas plc (JOG) said it is due to receive a further cash payment of $9.4 million from NEO Energy associated with finalization of the Greater Buchan Area (GBA) development solution, pursuant to the terms of the farm-out transaction announced in April.

The Western Isles FPSO has been in operation since early 2017 and is scheduled to come off-station as part of the planned cessation of production of the Western Isles fields around the second half of 2024, JOG said in a separate news release Friday. “The operational capabilities of the vessel, along with its relatively limited service-life to date, make the FPSO an excellent fit for use on the planned redevelopment of the Buchan field”, JOG noted.

According to JOG, the preferred solution for the redevelopment of the GBA was via the redeployment of an FPSO, “the lowest cost development option and the one that results in the lowest full-cycle carbon footprint of all the potential options evaluated”, since existing infrastructure can be reused. With limited modifications, the vessel can be connected to one of the anticipated third-party floating wind power developments near the GBA following the recent Innovation and Targeted Oil & Gas license awards made by Crown Estate Scotland, JOG said.

To prepare the FPSO for redeployment in the Buchan field, the planned modifications include the installation of water injection booster pumps, produced water injection modifications, and preparation of the vessel for future electrification. JOG said the modifications are expected to be completed by early 2026, and the vessel can be deployed to the field location and ready for the anticipated start of production in late 2026. JOG added that the North Sea Transition Authority had no objections to the planned redeployment of the FPSO in the Buchan field.

The main terms of the acquisition commit NEO Energy and JOG to acquire the vessel upon approval of the Buchan field development plan (FDP). Prior to this, the Buchan partners are responsible for the costs of storing the vessel from the date of handover, which is expected in the second half of 2024, according to the JOG release.

 “Finalizing the terms for the joint venture partners to acquire the FPSO, which is less than eight years old and requires relatively modest adaptation for our planned GBA redevelopment, is a tremendous milestone for the project”, JOG CEO Andrew Benitz said. “Re-using existing high-quality infrastructure and modifying it to be electrification-ready is exactly in line with our stated low carbon strategy and the net zero related objectives of the industry. The vessel is the cornerstone to completing the engineering work required to facilitate FDP approval for the Buchan redevelopment next year”.

JOG said that work is “currently progressing well” on the front-end engineering design (FEED) studies necessary before FDP approval. The work primarily involves specification of the planned drilling program, the design of the subsea infrastructure connecting the wells to the FPSO, and finalization of the modifications program needed to prepare the FPSO for redeployment. Further, the preparation of the environmental statement for the Buchan redevelopment is ongoing, with submission to the regulator expected before the end of the year, along with the draft FDP, JOG said.

The first phase of the planned GBA work program involves re-development of the Buchan field, with the next phases expected to involve the tie-back of the Verbier and J2 discoveries that lie within the GBA license area and the potential for regional third-party discoveries to be tied back to the FPSO, according to the release.

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