UK Awards 25 Licences in 29th Round - Update
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UK upstream regulator, Oil and Gas Authority (OGA), has awarded 25 licences to 17 firms in its 29th offshore round, covering 111 blocks or part-blocks.
The round was the first in two decades to focus solely on frontier, under-explored areas of the Rockall Basin in the Atlantic, mid-North Sea High, and part of the east Shetland platform. It attracted applications from 24 companies when it closed in October 2016.
Shell and ExxonMobil's newly awarded UK licences in the Atlantic offshore western Scotland each cover several blocks.
The UK's OGA CEO Andy Samuel said March 23: “We are particularly pleased to see firm well commitments, the targeting of new and under-explored plays, and first-time entrants to the basin, alongside a number of established companies, which will help stimulate further activity and value creation.”
Among better known names, five new UK licences were awarded to Statoil (all with BP as partner), two to Shell, and one each to BP, Centrica, Chrysaor, Exxon (partnered by Statoil), and Taqa. The remaining 14 blocks went to smaller independents: Alpha Petroleum, Ardent Oil (2 licences), Azinor Catalyst (2), Decipher, Draupner Energy, Nautical Petroleum, North Sea Natural Resources, Simwell Resources (2), The Steam Oil Production Co, and Zennor.
Samuel said that exploration activity had suffered as a result of the recent low oil prices, but that “highly encouraging success rates and finding costs on the UKCS” are now being seen. Maps of the 25 licences awarded are available here, here and here.
In terms of other UK rounds, OGA’s 2016 Supplementary Round closed March 7 and attracted 15 applications for 11 blocks, with awards to be announced later this year. OGA added: “The upcoming 30th offshore licensing round will focus on mature areas and is expected to be the most significant offshore round in recent decades… it is likely to be announced during the latter half of 2Q 2017 and will be open for 120 days."
Norton Rose Fulbright partner Kimberley Wood said the significant drop in numbers of companies applying and licences awarded is not all that too dissimilar to what is being seen in other licensing rounds globally and is therefore not unique to the UK. The fall in oil prices over the last two years has meant that exploration is not on the top of most company’s agendas. With the UK being a high cost mature basin, this exacerbates the problem and this licensing round just shows the enormity of the task that the OGA is facing to maximise recovery from the UK North Sea.”