Orcadian Pursues North Sea Field Development Plan Approval
The oil and gas development company Orcadian Energy has submitted to the North Sea Transition Authority (NSTA) a draft development plan for the Pilot oil field located in the British North Sea. According to the plan, the field will be developed with an FPSO vessel and a pair of wellhead platforms powered by a floating wind turbine.
Additionally, a structured farm-out process has been initiated for the Pilot oilfield, Orcadian reported on Monday. The oil field is located within the North Sea license P2244 Block 21/27a where Orcadian is the operator with a 100% interest. It is the largest oil field in the company’s portfolio.
Orcadian has 79Mbbls of 2P reserves in the Pilot Oil Field and Field Development Plan (FDP) builds on the work done as part of the concept selection process which culminated in NSTA sending a “Letter of No Objection to the low-emissions concept selected by Orcadian, as announced on December 1 of last year.
The low-emission FDP offered by Orcadian for Pilot is based on a floating production, storage and offloading (FPSO) vessel, with thirty-four wells to be drilled by a self-elevating platform through a pair of wellhead platforms and supply of energy from a floating wind turbine.
According to Orcadian, emissions per barrel produced are expected to be around one eighth of the 2020 North Sea average and less than half of the lowest emitting oil installation currently in operation on the UKCS. Globally, that puts emissions from the Pilot oilfield in the bottom 5% of global oil production, the British company explained.
The draft FDP will be discussed and agreed between NSTA and Orcadian over the next few months, but it cannot be approved until the associated development funding is finalized. The structured lease processwhich was launched for Pilot, is a key part of this process.
Windfall tax improves agriculture deal economics
Orcadian also noted that the introduction of the Energy Profits Levy (EPL) by the UK government last month has radically improved the economics of an affermage deal for some prospective farmers. While the EPL has introduced a new tax on the profits of UK oil and gas companies, it has also introduced significant investment allowances to encourage oil and gas companies to reinvest their profits to support the economy, the job and the Energy security in the UK.
As a result, for companies paying both EPL and UK corporation tax (a modified form of corporation tax payable only by the UK oil and gas industry), the after-tax development cost could be reduced by up to 75% compared to with a non-taxable company. The Board of Directors believes this will make an investment in the development of the Pilot Oilfield an increasingly attractive opportunity.
Steve BrownCEO of Orcadian, said: “The submission of the FDP project is another important step for the development of the pilot and highlights the maturity of the project. Our focus on minimizing emissions means that the scheme will be particularly attractive to companies wishing to reduce their emissions intensity, while the introduction of investment allowances under the energy profit tax will surely incentivize operators to double their investments in national energy security. .”