The UK Government has announced that 134 licenses, covering 252 blocks, are being offered in the 28th offshore licensing round.
Statoil, Total, Nexen, and EnQuest have the largest haul of operated licenses offered. A large number of smaller, new entrants have also been offered licenses. These include Arenite Petroleum, founded in 2014 in Westhill near Aberdeen, and EnCounter Oil, which has former EnCore and EnCana boss Alan Booth as a director. Fyrd Energy was also set up in 2014, and has Booth listed as a director.
Those seeking to use alternative extraction methods are also listed. Underground coal gasification firm Cluff Natural Resources has been awarded five licenses as operator. Reach Coal Seam gas has one license.
Oonagh Werngren, industry body Oil & Gas UK’s operations manager, said: “It is interesting to note more than 60 companies applied for licenses in this round and that the majority comprised smaller investors.
"Perhaps what is most telling is the nature of the work programs that companies have committed to, with only five firm wells and four contingent wells being included. Most licenses 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 UK Continental Shelf.
"The industry is facing a number of major challenges, including the lowest level of exploration for some time and rising costs in the sector. 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. We also note licenses for 94 Blocks in the licensing round are in, or close to, areas under special protection and conservation. We would encourage the Government to carry out environmental assessments urgently so that these additional areas (with all measures implemented to protect the environment) can contribute to boosting activity in the basin."
A further group of applications will be decided later, after environmental assessments, but this looks like being one of the biggest rounds ever in the five decades since the first licensing round in 1964, the government said this morning.
Business and Energy Minister Matthew Hancock said: “The North Sea provides a safe, secure, home-grown energy supply for the UK. We are determined to make the most out of the North Sea and have moved quickly to implement the findings of Sir Ian Wood’s review.
“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 and shows that our long term economic plan is working. We are creating more jobs by backing business with better infrastructure investment. Industry are scrambling over themselves invest in the UK and explore for energy.”
Statoil was awarded interests in 12 new licenses, nine as operator. "These awards strengthen our UK continental shelf portfolio significantly and underpin our long-term commitment as an operator in UK waters,” says Erling Vågnes, senior vice president for exploration in Statoil.
Eleven of the licenses are in the North Sea and the remaining one is West of Hebrides. In terms of size, this additional acreage constitutes almost 8000sq km.
Significant positions have been taken both in mature parts of the central North Sea, such as in the vicinity of the Mariner and Bressay projects, and in relation to plays largely untested in UK waters. In this latter category, the acreage picked up on the northern margin of the mid-North Sea High (Quadrants 37 and 38) and in the Halibut Horst area (Quadrants 13 and 14) can be highlighted.
“This new acreage holds the potential for new high-value barrels in our greater North Sea core area, both near our existing heavy oil projects and in new areas. This is in line with Statoil’s exploration strategy of taking large, untested acreage positions and deepening existing core areas,” says Vågnes.
Statoil is planning to drill two exploration wells in 2015 in acreage acquired in the previous UK licensing round, and also sees the potential for maturing several additional drilling candidates on the 28th round acreage.
Maersk Oil was been awarded five new licenses, three of them operated.
Independent Oil & Gas (IOG) was awarded the license between Cronx and Blythe containing the Elgood discovery and Tetley and Rebellion prospects.
The Elgood discovery was drilled by Enterprise Oil in 1990. IOG's estimate of the recoverable reserves in Elgood is 2.5MMboe, with additional prospective resources of 5.3MMboe in the Tetley and Rebellion prospects. Reprocessing of existing 3D seismic is required to determine whether Elgood connects to Cronx which would boost recoverable reserves significantly. IOG will now work on the potential development plans and commission a Blythe, Cronx and Elgood CPR to confirm the resources.
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