Concept Select Study for the Pilot Field

RNS Number : 1023U

Orcadian Energy PLC

01 December 2021

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR). Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

1 December 2021

Orcadian Energy plc

("Orcadian Energy", "Orcadian" or the "Company")

Concept Select Study for the Pilot Field

Orcadian Energy (AIM: ORCA), the North Sea focused oil and gas development company, is delighted to announce that it has received a "Letter of no objection" from the Oil and Gas Authority ("OGA") in respect of the development concept for the Pilot field.  This letter signals the finalisation of the "Assessment phase" and the entry into the "Authorisation phase" of development planning for the Pilot Field.

The letter acknowledges receipt of the Concept Select Report and subsequent Addendum (the "Concept Select Documents"), which were submitted in accordance with the OGA's Requirements for the planning of, and consent to, UKCS field developments guidance:

https://www.ogauthority.co.uk/media/7803/fdp_guidance_111021.pdf .

The development concept for the Pilot field is based upon the use of polymer flooding to maximise economic recovery, implemented using an FPSO, two wellhead platforms and over thirty production and injection wells. Energy requirements for the development are to be largely supplied by a floating wind turbine unit supplemented by associated gas. This is as detailed in the Company's Admission Document, and as amended by the submission of the CSR Addendum in July 2021, described in the announcement dated 15 July 2021.

The letter states that, based on the information provided to date and the OGA's current understanding of that information, the OGA has no objection to Orcadian preparing a Field Development Plan (FDP) for the Pilot Field as described in the Concept Select Documents.

The facilities concept delivers a well optimised process heat management scheme and includes a local wind power system, with highly efficient backup gas engines, to significantly reduce emissions. Scope 1 and Scope 2 emissions over the life of field have been estimated, by the Company's client engineers Crondall Energy, to be 2.6 kgCO2e per barrel, about an eighth of the North Sea average emissions in 2020: 20.0 kgCO2e/boe, and less than half of the lowest emitting oil facility currently operating on the UKCS:

https://www.ogauthority.co.uk/the-move-to-net-zero/net-zero-benchmarking-and-analysis/carbon-emissions-intensity-analysis/

The Company is preparing a plan to advance the FDP and progress the project through the Authorisation phase, with a particular focus on securing a contract for the provision of a FPSO (a floating production, storage and offloading vessel). As already announced the Company has engaged Crondall to assist with this and a short list of three providers have been identified (see announcement dated 28 October 2021). The Directors believe this vessel selection to be a crucial step in the process of finalising the basis of design for the rest of the development at Pilot and the commercial terms offered by the contractors will fundamentally define the capital requirements of the project. Further updates will be provided as appropriate.

Steve Brown, Orcadian's CEO, said:

"The letter of no objection for the concept select study from the OGA is a really important step in the progress towards the development of the Pilot Field.

"This is also particularly pleasing for us given the extensive work that the team have done to address the net zero aspects of the development.  We believe the plan that we have developed, once executed, will ensure that the Pilot Field emissions will lie in the lowest 5% of global oil production, an incredible achievement and one in keeping with the drive to net zero whilst continuing to ensure energy security in the UK.

"We look forward to continuing to work with the OGA and our other partners in taking this development forward."

For further information on the Company please visit the Company's website: https://orcadian.energy

Contact:

Orcadian Energy plc	+ 44 20 7920 3150
Steve Brown, CEO Alan Hume, CFO
WH Ireland (Nomad and Joint Broker)	[phone]
Harry Ansell / Fraser Marshall (Corporate Broking) Katy Mitchell /  Andrew de Andrade (Nomad)
Shore Capital (Joint Broker)	[phone]
Jerry Keen (Corporate Broking) Toby Gibbs / James O'Neill (Advisory)
Tavistock (PR)	+ 44 20 7920 3150
Nick Elwes / Simon Hudson / Matthew Taylor	[e-mail]

About Orcadian Energy

Orcadian is a North Sea oil and gas operator with a difference. In planning its Pilot development, Orcadian has selected wind power to transform oil production into a cleaner and greener process. The Pilot project is moving towards approval and will be amongst the lowest carbon emitting oil production facilities in the world, despite being a viscous crude. Orcadian may be a small operator, but it is also nimble, and it has grasped opportunities that have eluded some of the much bigger companies. As we strike a balance between Net Zero and a sustainable energy supply, Orcadian intends to play its part to minimise the cost of Net Zero and deliver reliable organic energy.

Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating subsidiary, was founded in 2014 and is the sole licensee of P2244, which contains 78.8 MMbbl of 2P Reserves in the Pilot discovery, and of P2320 and P2482, which contain a further 77.8 MMbbl of 2C Contingent Resources in the Elke, Narwhal and Blakeney discoveries (as audited by Sproule, see the CPR in the Company's Admission Document for more details). Within these licences there are also 191 MMbbl of unrisked Prospective Resources. These licences are in blocks 21/27, 21/28, 28/2 and 28/3, and lie 150 kms due East of Aberdeen.  The Company also has a 50% working interest in P2516, which contains the Fynn discoveries. P2516 is administered by the Parkmead Group and covers blocks 14/20g and 15/16g, which lie midway between the Piper and Claymore fields, 180 kms due East of Wick.

Pilot, which is the largest oilfield in Orcadian's portfolio was discovered by Fina in 1989 and has been well appraised. In total five wells and two sidetracks were drilled on Pilot, including a relatively short horizontal well which produced over 1,800 bbls/day on test. Orcadian's proposed development plan for Pilot is based upon a Floating Production Storage and Offloading vessel, with over thirty wells to be drilled by a Jack-up rig through a pair of well head platforms and will include a floating wind turbine to provide much of the energy used in the production process. Emissions per barrel produced are expected to be about an eighth of the 2020 North Sea average and to lie in the lowest 5% of global oil production.

 

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