The latest offshore oil and gas licensing round is shaping up to be one of the biggest in 50 years, the UK Government said yesterday.
A total of 134 new North Sea exploration licences have been awarded by the Department of Energy and Climate Change (DECC), but the final figure for the current 28th licensing round could be a new record as some applications are still awaiting decisions after environmental assessments.
One North Sea explorer, Independent Oil and Gas (IOG) said it showed there was “life in the old dog yet”.
And industry veteran Sir Ian Wood said: “This looks like being one of the biggest rounds ever in the five decades since the first licensing round in 1964.”
Trade body Oil and Gas UK (OGUK) hailed yesterday’s figure as a “good sign” that investors were still interested in the UK North Sea.
OGUK operations director Oonagh Werngren added: “It is interesting to note more than 60 companies applied for licences in this round and that the majority comprised smaller investors.
“Perhaps what is most telling is the nature of the work programmes that companies have committed to, with only five firm wells and four contingent wells being included.
“Most licences have been awarded on the basis of obtaining or reprocessing 2D and 3D seismic data.
“The disappointingly low number of wells highlights the need to stimulate new plays through detailed technical work, which requires measures to encourage more investment in the UKCS (UK continental shelf).
The industry is currently facing a number of major challenges, including the lowest level of exploration for years, low crude prices and spiralling operating costs.
Ms Werngren said: “It is extremely important to ensure the award of these licenses translates into the drilling of more successful wells on the UKCS, and we need to ensure the pipeline of new developments continues to flow from the basin.
“On a more positive note, it is encouraging to see companies beginning to look seriously at frontier areas, stepping away from the known basins and into deeper water.”
New licences in the west of Shetland area, where experts believe there could be a lot more oil, but it will be more challenging to reach, were awarded to France’s Total and UK independent Chrysaor.
IOG said it had been awarded the licence between Cronx and Blythe containing the Elgood discovery and Tetley and Rebellion prospects.: “The 28th round has been a success and the outcome is good news for UK Plc, UK oil jobs and, eventually, oil-related tax revenues.
“In order to derive those benefits the industry needs tax cuts and, most importantly, tax clarity in the short term.
“With the North Sea, there is life in the old dog yet.”
BG Group said it had secured five exploration blocks near existing production hubs, adding: “Our next step is to carry out further data analysis and seismic studies.”
Norway’s Statoil was awarded interests in 12 new licences, including nine as operator.
Erling Vagnes, Statoil’s senior vice president for exploration, said: “We were awarded all the acreage that we had applied for and are, of course, very pleased.
“These awards strengthen our UKCS portfolio significantly and underpin our long-term commitment as an operator in UK waters.”
Maersk Oil UK was awarded five licences, three of which will be operated by the Danish-owned company.
“The award of these new licences supports the long-term growth strategy for the UK business, managing director Martin Rune Pederson said.
Announcing the awards, Business and Energy Minister Matthew Hancock said: “This successful licensing round, which is on track to be one of biggest rounds ever in five decades, is a boost for the UK economy.
“Industry are scrambling over themselves to invest in the UK and explore for energy.”