Orcadian Energy plc said it had submitted a draft field development plan to the North Sea Transition Authority (NSTA) and started a structured farm-out process for the Pilot oilfield, off the west coast of Aberdeen.
PILOT
The company also noted that the new Energy Profits Levy had “transformed economics of North Sea investment for tax-paying companies”.
Orcadian has 79MMbbls of 2P reserves in the Pilot oilfield within licence – P2244.
The oilfield’s field development plan (FDP) follows the company’s choice in December 2021 of a low-emissions concept which is based on a floating production storage and offloading vessel (FPSO).
A total of 34 wells would be drilled by a Jack-up rig through a pair of well head platforms and power from a floating wind turbine.
“Emissions per barrel produced are expected to be about an eighth of the 2020 North Sea average, and less than half of the lowest emitting oil facility currently operating on the UKCS,” said the company in a statement.
“On a global basis this places the Pilot oilfield emissions at the low end of the lowest 5% of global oil production.”
The company needs to finalise development finance which involves the farm-out process.
TAXES
Orcadian added that the Energy Profits Levy introduced by the Government last month, had “radically improved the economics of a farm-in deal for some potential farminees”.
“Whilst the EPL did introduce a further tax on profits from UK oil and gas companies, it also introduced significant investment allowances to encourage oil and gas companies to reinvest their profits to support the economy, jobs and UK energy security.
“Accordingly, for companies that pay both EPL and UK ring fence corporation tax (a modified form of corporation tax only payable by the UK oil and gas industry), the after-tax cost of development could be reduced by up to 75% when compared with a non-tax paying company.
“The board believe that this will make investment in the development of the Pilot oilfield an increasingly attractive opportunity.”