UK-based oil and gas firm Jersey Oil & Gas has decided to let two North Sea licenses expire as they're not part of the company's Greater Buchan Area hub project.
The licenses in question are P2497 Block 20/4c (Zermatt) and P2499 Block 21/2a (Glenn), and JOG has decided not to progress to the next license phase, which would have required committing to a firm well in each of these two licence areas.
"Accordingly, the licences will automatically cease and determine at the end of Phase A of their Initial Term on 29 August 2021," the company said.
Jersey Oil and Gas is working to develop the Greater Buchan Area (GBA) oil production hub in the UK North Sea and has earlier this year selected a development concept. The selected concept envisions development centered around a single, normally manned, integrated wellhead, production, utilities, and quarters platform, powered from shore, to be located at the Buchan field.
JOG said Wednesday: "As announced on 3 March 2021 in our Greater Buchan Area Development Project Concept Select Update, the selected concept for the GBA Development is planned to be executed in three phases and neither Glenn nor Zermatt were included in any of these phases.
"In the case of Glenn, this was due to the current sub-commercial status of the Glenn and Glenn North oil discoveries and in the case of the Zermatt license, it was after taking into account the higher ranked, drill-ready portfolio of exploration opportunities in Licence P2170 (Verbier). With Glenn and Zermatt not featuring in our GBA Development plans, this licence determination does not impact our GBA farm-out process, which is ongoing,"
The GBA development concept is based on P50 Technically Recoverable Resource estimates of, in aggregate, 172 MMboe of light sweet crude and associated gas within the Core GBA, which includes the Buchan oil field and J2 and Verbier oil discoveries. The development is planned to be executed in three phases, with the CAPEX costs for Phase 1 estimated to be approximately £1 billion. On March 11, the company formally launched a farm-out process for the GBA.
Commenting Wednesday, Andrew Benitz, CEO of Jersey Oil & Gas, commented: "JOG's management has taken the pragmatic and cost-effective decision not to proceed with firm well commitments for the non-core Glenn and Zermatt licences in the context of efficient and targeted capital allocation. JOG fully respects the OGA's Asset Stewardship Expectations which govern the delivery of exploration and appraisal work programmes, and we continue to work closely with the OGA as we progress our plans for the company's core GBA Development project."
According to statements previously made by JOG, the company is looking to produce first oil from the first phase in Q4 2025. The second phase startup would follow in 2027, and Phase 3 in 2028.
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