Jersey boosts troubled North Sea with ‘significant’ prospect
JERSEY Oil and Gas has handed a rare confidence boost to the beleaguered North Sea by breaking news of a “significant new prospect” and reaffirming plans for a drilling campaign on discoveries north east of Aberdeen.
The campaign, which is subject to funding and scheduled for 2022, was signalled with the results of a comprehensive subsurface evaluation completed by Jersey across its licensed acreage.
The North Sea-focused explorer said the study not only validates its existing prospects, but identifies a significant new find. The Wengen prospect is located directly west of the producing Tweedsmuir field.
Jersey held out the prospect yesterday of linking the Verbier Deep, Cortina NE (J64), Wengen and Zermatt prospects to the Greater Buchan Area production facility it plans to develop, via subsea tiebacks. The prospects are located a short distance from the proposed GBA facility.
Jersey said the finds have been matured to “drill-ready” status, with probable resources of 222 million barrels of oil equivalent. The Wengen prospect is estimated to contain probable reserves of 62 Mmboe, Cortina NE 62 Mmboe (with a further 23Mmboe of upside potential), Zermatt 52 Mmboe, and Verbier Deep 23 Mmboe.
Jersey chief executive Andrew Benitz said: “Our latest subsurface work has further detailed the significant value within the wider Greater Buchan Area.
“These highly attractive, drill-ready exploration prospects are in the immediate vicinity of our planned GBA production facility and, as a result, a discovery at any one of these prospects would have the potential to extend the GBA production plateau and further enhance shareholder value. We look forward to progressing a drilling campaign post a successful conclusion to our upcoming GBA sales process.”
Mr Benitz underlined the company’s commitment to the GBA production hub in October. In a video presentation, he reaffirmed plans to restart production from the giant Buchan oil field in the Moray Firth. Jersey reckons a further 80 million barrels could be recovered from Buchan, which was taken out of production in 2017 – 36 years after it was brought on-stream.
The company made the Verbier find with Norwegian giant Equinor in 2017.
Optimism over the potential of Jersey’s North Sea prospects comes at the end of a tumultuous year for the area, which has seen operators slash jobs and cut expenditure in response to the collapse in crude prices.
Crude prices slumped amid the collapse in demand sparked by economies moving into lockdown to halt the spread of coronavirus, with Brent crude falling from around $70 a barrel in January to less than $16 in April. However, prices have rallied since and were boosted significantly in recent weeks with positive news on the coronavirus vaccine front, with Brent crude closing above the $50 mark for the first time in nine months last week.
Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, believes the oil price rally will continue for now, supported by “rapidly shrinking
floating crude oil stocks”, but does not expect prices to reach $60 imminently.
Mr Schieldrop said: “We think that this rally has further to go. At least two, three, four dollars more, but this is not a one-way street. We will visit sub-usd 50/bl again.
“The biggest threat is a set-back for the Pfizer Biontech vaccine. Fifty US states are expected to have the Pfizer Biontech vaccine by Wednesday this week, while vaccines in the UK have already started. The oil market and financial participants are pricing it in, but have they priced in too much too early?”
He added: “We don’t think that this oil price rally has fully priced out yet.”
Brent Crude was trading at just under $50 last night.
Shares in Jersey closed up 4.35 per cent, or 5p, at 120p.