Oil and gas companies Spirit Energy and Neptune Energy have agreed to partner on the development of the Pegasus West gas discovery in the UK Southern North Sea.
Neptune Energy has agreed to acquire a 38.75 per cent equity interest from Spirit Energy in the Pegasus West discovery and surrounding acreage (P1724, P1727, P4257 and P2128) in the UK Southern North Sea.
Spirit Energy is holding the remaining 61.25 per cent stake and operatorship.
The licence interests match the partners’ equities in the nearby Neptune-operated Cygnus gas field, which under the agreement will become the host platform for the Pegasus development, subject to OGA approval.
Pegasus West was discovered in 2014 and is currently operated by Spirit Energy.
Entry by Neptune into the Pegasus West Area aligns interests in both the discovery and the Neptune-operated Cygnus gas facility (Neptune Energy 38.75 per cent and operator, Spirit Energy 61.25 per cent) enabling acceleration of the development of Pegasus West as a subsea tieback to the existing Cygnus field.
Neptune will work closely with Spirit Energy on front end engineering and design (FEED) studies in 2021 with the intention to reach a final investment decision by year end.
Spirit Energy said on Tuesday it will work with Neptune on FEED studies in 2021 with the intention to reach a final investment decision within the next 12 months.
Once sanctioned, Neptune would become the operator of the development through to first gas and into production.
Neptune Energy’s Managing Director in the UK, Alexandra Thomas , said: “The alignment of interests with Spirit Energy in the Pegasus West development offers material benefits of faster development, lower costs and lower carbon intensities as well as optimisation of production operations through our existing world-class gas production asset, Cygnus .
“Cygnus is strategically important for domestic gas supply to the UK, and has one of the lowest carbon intensities on the UKCS, at less than 2kg per boe. The development of Pegasus West will ensure further UK low carbon gas supply, while opening up opportunities for development of other potential gas resources in the Greater Cygnus Area”.
Gerry Harrison , EVP, HSES, Subsurface & Non-Operated UK Assets at Spirit Energy, said: “As a subsea tieback to Cygnus, Pegasus West will be a great example of how we can build on the UK’s existing infrastructure, maintain security of supply and reduce our carbon intensity.
“With an estimated 83 billion cubic feet of recoverable gas at Pegasus West, it adds further volumes to the Greater Cygnus Area and we are looking forward to working with Neptune to bring this development through to production”.