LONDON (ShareCast) - (Sharecast News) - Upstream oil and gas company Jersey Oil & Gas announced on Tuesday that Equinor has elected not to exercise the three month option which it had granted over a 50% equity interest of blocks 20/5a and 21/1a - the 'Buchan Blocks - which contain the Buchan oil field and the J2 oil discovery.
The AIM-traded firm described the Buchan oil field as a "significant" redevelopment opportunity, having ceased production prematurely due to safety concerns with its aging production facilities which were removed by the previous operator.

It said "a wealth" of subsurface data existed on the field, with two major independent studies concluding that the field had remaining mean case recoverable volumes of around 80 million barrels of oil equivalent.

Buchan had historically produced almost entirely through only natural depletion, and the deployment of modern technologies and practices was expected by the firm's management to enable the field to produce for potentially in excess of a further 20 years.

Jersey Oil & Gas said Buchan would form the hub for its Greater Buchan Area (GBA) development plans.

In close proximity were the JOG-owned J2 and Glenn oil discoveries, and the Equinor-operated Verbier oil discovery, which the board said represented "attractive" potential tie-back opportunities to the Buchan hub.

In aggregate, Jersey's internal estimates indicated that around 144 million barrels of oil equivalent of gross recoverable resources could 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 was said to be "significant" upside potential to tie-in additional third party discovered resources and any further GBA exploration upside.

Jersey Oil & Gas said Equinor would continue its efforts to mature and assess the opportunities in the adjacent Equinor-operated P.2170 'Verbier' licence, working closely with Jersey as part of the overall Greater Buchan Area plan to maximise economic recovery in the area.

The company said it would remain as 100% licence holder and operator of blocks 20/5a and 21/1a, adding that it had now started the concept appraisal and selection phase activities of the GBA development.

"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," said chief executive officer Andrew Benitz.

"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."

Benitz noted that the company had initiated the appraise and select phases of its 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 [the] field development plan in 2022."

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