Earlham and Orwell development concept: gas-to-wire with carbon capture to power an offshore data centre

AIM-listed Orcadian has commenced the Assessment Phase for the development of the Earlham and Orwell gas fields on its 100% owned licence, P2680. The Company's preferred development concept is an offshore power station with integrated carbon capture, fuelled by Earlham and Orwell gas, and generating low-carbon power for a co-located offshore data centre, as the first phase of an islanded, low-carbon, offshore grid (the 'Earlham Gigagrid'). The high carbon dioxide content of Earlham gas makes conventional pipeline export unattractive; generating power at the field, capturing the carbon dioxide and reinjecting it into the reservoir is, in the Directors' opinion, the optimal route to monetise the Company's existing gas resource. Orcadian's core business remains as a North Sea oil and gas exploration and development company; incubating the project through Gigagrid is intended to create a new customer for the power generated from the field. If developed, the Directors believe this could be among the first offshore data centres of scale in the UK.

Demand for compute, driven by the Artificial Intelligence ('AI') revolution, has upended electricity demand forecasts around the world. The Directors believe offshore power stations coupled with offshore data centres could help to satisfy part of that demand.

The UK's offshore industry, which was at the forefront of enabling oil and gas production in the harsh conditions of the North Sea, has a proven capability to marinize, and make compact, complex industrial processes. That same capability can help enable data centres offshore. The benefits of locating data centres offshore are threefold: firstly, they are far from anyone's backyard; secondly, cooling systems benefit from being located next to an immense heat sink; and finally, co-location of the data centres with a dedicated gas field and low carbon power station, unconnected to the grid, eases the pressure to provide costly transmission and distribution services.

The Directors believe this approach needs no subsidy from government, nor places hidden burdens on bill payers, while potentially contributing to the UK's position in the AI sector.

Highlights

Orcadian, the North Sea focused, low emissions, oil and gas exploration and development company with five licences in its portfolio, is establishing Earlham Gigagrid Ltd and intends to assign the Company's 100% interest in P2680 to a subsidiary of Gigagrid. The Company has commenced the process to prepare and submit a CSR for the proposed development of the Earlham and Orwell gas fields in licence P2680. The current intention, subject to the North Sea Transition Authority ('NSTA') approving the assignment of P2680 and providing a 'Letter of No Objection' ('LONO') to the selected Earlham development concept, and the subsequent receipt of all other necessary approvals and consents, is to develop the gas fields to supply a power station located at the Earlham field. The power station is planned to be equipped with carbon dioxide sequestration systems. A 200 MW (IT load) data centre hall, likely located on a dedicated jacket, would be constructed next to the power station.

Captured carbon dioxide would be re-injected into the Earlham reservoir to provide pressure support. Orcadian, as previously announced, estimates that the methane resources in Earlham amount to 114 bcf and that the Orwell field, which had been depleted previously, can produce a further 31 bcf of methane.

IPC loans

Orcadian's wholly owned subsidiary, Orcadian Energy (CNS) Ltd, has agreed a deferred repayment schedule with The Independent Power Corporation Limited for all amounts owed to IPC, which total approximately £1.34 million, including capitalised interest, at 30 June 2026. All amounts are now repayable by 31 December 2027, with interest fixed at 8.5% per annum. The facility is, or will be, secured by fixed and floating charges over the Company's interests in licence P2244 (Pilot) and licence P2680.

Offshore facilities

Orcadian believes that the complex, illustrated below, with a wellhead platform providing support for two production wells and one carbon dioxide injection well, bridge linked to a power station platform, with the power station then linked to a data centre platform, will likely be favoured in the Concept Select Process. The exact configuration adopted should not, however, be pre-judged. All are subject to NSTA providing a LONO to the selected concept, and the subsequent receipt of all other approvals and consents, including any required carbon storage licence.

© Richmond Offshore Ltd

In securing a LONO for this concept, Gigagrid, as the sole owner of Licence P2680, would be in a position to seek the regulatory approvals that are necessary to deliver a cost-advantaged, low environmental impact, data centre of scale, with the potential for high power density per rack supported by direct-to-chip liquid cooling - the characteristics sought by the specialist data centre developers and operators that Orcadian expects ultimately to invest in the project.

This first phase could, if approved and developed, support a data centre of approximately 200 MW.  Orcadian believes that there is the possibility of pursuing a follow-on strategy of installing multiple power station and data centre halls that could provide over a gigawatt of dispatchable low-carbon power, without adding any stress to the national grid.

The formation of Gigagrid is designed to enable third parties to make direct investments into the Earlham development, offshore power station and data centre, and the overall Gigagrid project without diluting Orcadian Shareholders' interests in Orcadian's viscous oil projects or the Central North Sea gas prospects.

Analysis published by Thunder Said Energy of recent US data centre land transactions indicates that fully permissioned, powered, 'shovel-ready' sites have commanded significant premia to their development cost. That analysis relates to onshore US land transactions only and cannot be applied directly to a UKCS offshore development; it is not a valuation of the Earlham power station and data centre project, or of Gigagrid, and no reliance should be placed on those metrics being applicable to Gigagrid.

The Directors believe there may, over the longer term, be potential to develop further power generation and data centre capacity, subject to the necessary government approvals, commercial agreements and project financing. The Directors believe the data centre economics could be attractive to the Hyper-scalers and Neo-scalers without government or bill-payer subsidy.

Earlham and Orwell Licence

Earlham has a P50 methane resource of 114 bcf and the Company believes an Orwell redevelopment could deliver a further 31 bcf. Under the proposed concept, this gas would be monetised over the operational phase of the data centre.

The Earlham discovery is a high-quality Leman sand accumulation with high net to gross (c. 95%), porosity of 18% and permeability of c. 250 mD.  It was discovered in 1995 by Talisman and in 1996 BP drilled a high-angle appraisal, and intended development, well with a 1,559m section in the gas pay zone. BP curtailed the well test and abandoned the well because of the high CO2 content in the gas.

The Directors expect development and production of the gas in Earlham to be relatively straightforward given the high-quality reservoir, with no well stimulation anticipated. Locating the power station offshore at the Earlham site dispenses with high voltage transformers or AC/DC converters, an electrical cable to the beach, a CO2 disposal pipeline, and a natural gas export pipeline; the wells are to be located on a bridge-linked wellhead structure adjacent to the power station.

To enable this, Earlham gas will be blended with gas from Orwell to achieve an average methane content of 50%. Identification of the best turbine to generate power from this low-calorie gas and to integrate this system with a carbon capture system will be an important product of the concept select process.

The CO2 stream will then be compressed and pumped so that it can be reinjected into the Earlham reservoir which will benefit the Earlham reservoir pressure; Orcadian has designed the Earlham development strategy as an enhanced gas recovery scheme.

Licence P2680 also contains the Clover prospect, which is a Bunter prospect analogous to the Orwell Field that lies 10 km to the Southeast of Clover and produced over 300 bcf. Orcadian maps the prospect as potentially containing 153 bcf of gas with a geological chance of success of 38%.

Steve Brown, Orcadian CEO, said:

'We believe that this development concept for Earlham, focussed on generating low-carbon power offshore to supply an offshore data centre, can be transformational for the value of our P2680 licence. That is why we have established Gigagrid. Orcadian intends to develop the project opportunity, to invite proposals to participate from third party investors, and at the right stage to invite participation in the project from among the Hyper-scalers and the growing band of Neo-scalers who may find the opportunity to expand the project to gigawatt scale attractive.

'Earlham could be among the first gas fields on the UKCS to be dedicated to a facility designed to capture the substantial majority of the emitted carbon dioxide for reinjection underground. Scope 3 emissions are expected to be less than 10% of a conventional gas development which supplies an unabated power station. This project is one which we believe supports the government's vision of a clean UK power system in 2030, whilst also delivering on the government's energy security goals and crucially enabling the construction of a gigascale data centre.

'Alongside our significant resource in viscous oil development projects, through Earlham Gigagrid, Orcadian aims to help enable low carbon compute investment founded upon low cost, low-carbon power, without adding any pressure on the national grid or making power demands upon NESO. The low-carbon power is planned to be generated without any government subsidy or interventional policies.

'We will engage with the NSTA in relation to the concept select process and with other relevant regulators: OPRED, DESNZ, Ofgem, NESO, Ofcom, DSIT, Crown Estate, OMAR and the local authorities where the data cable might land.'

Original announcement link

Source: Orcadian Energy