2017-built FPSO picked for redeployment at North Sea oil project

UK-headquartered Jersey Oil & Gas plc and the HitecVision-backed NEO Energy have chosen a floating, production, storage, and offloading (FPSO) vessel, which is currently operating in the North Sea, for work on their oil development project on the UK Continental Shelf (UKCS). This FPSO will be modified to enable electrification via floating offshore wind to slash GHG emissions.  

Back in July 2023, the duo revealed that the preferred solution for the redevelopment of the Greater Buchan Area (GBA) was via the redeployment of an FPSO, enabling “the lowest cost development option and the one that results in the lowest full-cycle carbon footprint of all the potential options evaluated.” The two players’ conclusion was 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 FPSO unit to have the potential to be connected to one of the anticipated third-party 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) license awards made by Crown Estate Scotland. The preferred development solution is aligned with the North Sea Transition Authority’s obligations to maximize the economic recovery of reserves and assist with achieving the UK government’s net zero target. 

Jersey and NEO Energy have executed agreements to acquire the FPSO Western Isles, which will be used as the processing facility for the planned redevelopment of the Buchan field. Consequently, the NSTA issued a letter confirming it had no objections to the concept select report submitted in support of the Buchan redevelopment program, utilizing the redeployment of the FPSO Western Isles, which is currently operating in the UK North Sea. The FPSO is owned by Dana Petroleum (E&P) Limited (76.9188%), as operator, and NEO (23.0812%). 

According to Jersey, the FPSO Western Isles is “a high-quality vessel” that 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. The company is adamant that the operational capabilities of the vessel, along with its relatively limited service life to date, make it “an excellent fit” for use at the planned redevelopment of the Buchan field.

Following the handover of the vessel to NEO, a work program is planned to be undertaken to prepare the FPSO for redeployment on Buchan, involving the installation of water injection booster pumps, produced water injection modifications, and preparation of the vessel for future electrification. These modifications are expected to be completed by early 2026, so that, the vessel can be deployed to the field location and hooked up for the anticipated start-up of production in late 2026.

Furthermore, the main terms of the acquisition of the 76.9188% interest in the FPSO not currently owned by NEO commit the Buchan field partners to acquire the vessel upon the approval of the Buchan FDP. Prior to this milestone being achieved, the GBA partners are responsible for the costs of storing the vessel from the date of handover, which is anticipated to be in the second half of 2024. The FPSO acquisition and associated costs form part of the previously announced farm-out carry arrangements agreed between NEO and Jersey.

Andrew Benitz, CEO of Jersey Oil & Gas, commented: “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. 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.”

Moreover, Jersey is now due to receive a further cash payment from NEO of $9.4 million associated with the finalization of the GBA development solution, as a result of executing the FPSO acquisition agreement. Through the expenditure carry arrangements agreed with NEO, Jersey is being fully carried for its 50% share of the estimated $25 million cost to take the Buchan field through to FDP approval. The firm will also be carried for 12.5% of the Buchan field redevelopment costs – equivalent to a 1.25 carry ratio. The company plans to ultimately retain a fully carried 20-25% interest in the Buchan redevelopment.

Jersey explains that work is currently progressing on the FEED studies that require completion ahead of FDP approval and the development moving into the execution phase of activities. This covers the specification of the planned drilling program, the design of the subsea infrastructure connecting the wells to the FPSO, and the finalization of the modifications program that is required to prepare the FPSO for redeployment. The preparation of the environmental statement for the Buchan redevelopment is also ongoing and on track to be submitted to the regulator by year-end, along with the draft FDP.

Located in the Central North Sea, the GBA project covers blocks that contain the Buchan oil field and J2 oil discovery along with the P2170 license blocks 20/5b & 21/1d, which include the Verbier oil discovery and other exploration prospects. The total GBA acreage is estimated to contain 172 million barrels of oil equivalent (MMboe) of discovered P50 recoverable resources net in addition to the significant exploration upside potential of approximately 168 MMboe of prospective resources close to the firm’s planned Buchan facility.

The first phase of the planned GBA work program entails the redevelopment of the Buchan field, with the start-up of production targeted for late 2026. Subsequent phases are 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.

The 2017-built FPSO Western Isles, which was completed by COSCO Shipyard Group in Qidong, China, has a storage capacity of 400,000 barrels of oil (bbls) and an oil production capacity of 44,000 barrels of oil per day (bopd). The vessel, which weighs more than 28,000 tons, features a Sevan Series 400 cylindrical monohull, designed especially for the high wave heights and wind speeds at the Harris and Barra oil fields.

With a hull diameter of 70 m, the FPSO is compartmentalized into ballast tanks, cargo tanks, clean and dirty slops tanks, and other utility systems such as open drains, diesel, and potable water. The vessel features 17 riser slots and can offload at a rate of 3,500 m³/hour.