P2498 Blocks 20/5a, 20/5e & 21/1a (Buchan & J2) – JOG 20% working Interest

The licence is classified as a straight to Second Term licence with a duration until February 2025 for approval of a Field Development Plan (FDP) for the re-development of the Buchan oil field and the development of the J2 (well 20/5a-10y) oil discovery.

Buchan oil field

The Buchan oil field was discovered by well 21/1-1, drilled by Transworld Petroleum and Texaco in 1974 into a pronounced and relatively elevated horst block at the eastern end of the Buchan Horst.

The well encountered a significant oil column, in excess of 900 ft, in fractured, Upper Old Red Sandstone that flowed 890 bopd on test. The reservoir was significantly over-pressured at 3,400 psi above hydrostatic pressure. The oil is sweet and under-saturated with an average GOR of 285 scf/stb and gravity of 33°API. Subsequent appraisal drilling tested up to 5000 bopd on test (21/01-2) and demonstrated an oil column in excess of 1,900 ft (well 21/1a-6). The field was brought into production by BP in 1981 with nine development wells and initial production peaked at 54,537 bopd.

The field exceeded all initial production expectation and 148 mmstb of oil have been produced under natural depletion with aquifer support to the cessation of production (COP) in May 2017.

The reservoir pressure has over time declined by 5,000psi but has been relatively stable at approximately 2500 psi from 1992 to the COP. Oil production continued until May 2017, when the Buchan Alpha platform was shut in for safety reasons relating to the platform infrastructure.

Since acquiring the Buchan licence the Company has completed a significant amount of static and dynamic modelling to fully incorporate all available subsurface information and to successfully history match 36 years of production data.  This work has continued with NEO Energy (NEO) as the new Operator of the licence and has been expanded to take into account specification of the planned field development solution, being the redeployment of the “Western Isles” FPSO.

The Western Isles FPSO, which is being acquired by NEO on behalf of the Buchan field partners, is currently operating in the UK North Sea and is owned by Dana Petroleum (E&P) Limited (76.9188%), as operator, and NEO (23.0812%).  It 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 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.  The re-use of existing infrastructure also contributes to the FPSO development solution being the one that results in the lowest full-cycle carbon footprint all the potential options evaluated for the GBA.

Work is currently progressing on the Front End Engineering and Design (FEED) studies that require completion ahead of FDP approval and the development moving into the execution phase of activities.  The total capital expenditure forecast for the Buchan redevelopment is estimated by the Operator, NEO, to be approximately £850-950 million (gross cost) to bring into production over 70 million barrels of oil equivalent (95% oil), with peak production rates of approximately 35,000 barrels of oil equivalent per day.  This estimate will be refined as part of completing FEED and the contract tendering activities that precede finalisation of the FDP.

Approval of the Buchan FDP is scheduled for 2024, with first production forecast for late 2026.  Following the start-up of production from Buchan, subsequent phases are expected to involve the tie-back of the Verbier and J2 discoveries that lie within the GBA licence area and the potential for regional third-party discoveries to be tied back to the FPSO.

J2 (well 20/5a-10Y) oil discovery

The J2 discovery was drilled by well 20/5a-10Y in 2006. The well was drilled as a deviated well to test the westerly culmination of a 3-way dip and fault closed structure mapped at Late Jurassic, Sgiath Formation level and located on a structural terrace downthrown to the north of the Buchan Horst and the Buchan field.

The initial well (20/5a-10) was abandoned due to higher than expected pore pressures being encountered within the Late Jurassic interval, whilst the first side-track well (20/5a-10Z) was abandoned due to wellbore instability/collapse within the Early Cretaceous Carrack Formation.

The second side-track (well 20/5a-10Y) encountered hydrocarbons within the objective shallow marine Sgiath Formation Sandstone that flowed at 2,850 bopd plus 1.2 mmscfd (37 API, GOR 426 scf/bbl) on test. The well also encountered c. 16 metres of excellent quality, deep marine, intra Kimmeridge Clay Formation, Burns Sandstone that flowed at 4,800 bopd plus 2.6 mmscfd (39 API, GOR 500 scf/bbl) on test.

The two reservoirs are contained within different pressure cells. JOG estimates that the J2 oil field contains 20mmboe of mean case recoverable oil volumes.

Buchan Andrew oil discovery

The Andrew Sandstone reservoir forms a secondary reservoir in the Buchan oil field. Wells 21/1-1 and 20/5a-5 have penetrated oil-bearing reservoir within the Andrew Formation, these wells are located towards the crest of the structure. The trap constitutes a low relief, four-way closure with approximately 60 ft of closure and a spill point that correlates closely with observed oil-down-to depths in the wells.

Rockflow has performed a high-level evaluation of the Andrew Sandstone reservoir oil in place, the derivation of which has provided clear insight into the primary volumetric uncertainties and their potential mitigation through further maturation of the opportunity.