A new source of natural gas from the British waters of the North Sea should start producing within two years, operator Premier Oil announced Monday.

The company said its joint venture and infrastructure partners have signed off on the development of the Tolmount Main natural gas field in the southern waters of the North Sea. At its peak, the field will be producing about 58,000 barrels of oil equivalent per day.

Premier's development plan calls for minimal buildup and has a pricetag of $120 million.

"The sanction of our high-return Tolmount project marks a major milestone for Premier and underpins our medium-term U.K. production profile," CEO Tony Durrant said in a statement. "Tolmount is one of the largest undeveloped gas discoveries in the Southern North Sea and is, in barrel of oil equivalent terms, similar in size to our Catcher project."

The complex, comprised of the Catcher, Burgman and Varadero fields, was discovered in 2010 by Premier and the company at the time put the gross reserve estimate between 25 million and 50 million barrels of oil.

Catcher production has been consistent at around 60,000 barrels of oil equivalent per day, close to its peak performance. Premier's net production during the first six months of the year averaged 76,100 barrels of oil equivalent per day, below its full-year guidance of 80,000 barrels of oil equivalent per day. The company attributed the decline to the sale of some of its assets and natural field maturation.

Field maturation has forced the idling of several production platforms. British natural gas imports are on pace to increase from about 45 percent of demand to 76 percent by 2030.

British officials have moved to fast-track the development of inland shale natural gas basins, though that sector is in its infancy in the country.

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