High interest in offshore but low commitments in UK round
134 licences were awarded, and a further 94 are subject to environmental assessment
Awards made in November in the UK’s 28th licensing round point to a high level of interest in the offshore, particularly from smaller explorers - but work commitments add up to only six firm wells. The majority of operators have committed only to reprocessing existing seismic data, although all licences provide for a drill-or-drop well option.
The Department of Energy and Climate Change (DECC) awarded an initial 134 licences covering 252 blocks, and said another 94 licence applications are still subject to environmental assessment. The round could therefore prove to be larger than the 27th round, under which 219 licences were awarded in 2012 and 2013. Promote licences, under which small companies can carry out limited work with the aim of interesting larger operators in the areas, accounted for 48 of the 134 awards.
The big winners in the round were Statoil, receiving nine licence offers as operator, Enquest with eight, Nexen (owned by China National Offshore Oil Corporation) with seven and Parkmead with six. Cluff and Total each received five offers. The operators committing to drill a well were BG, BP, E.On, Nexen, PA Resources and Summit. Additionally, four contingent wells could be drilled, by Parkmead, Perenco, Nexen and Statoil.
Although most licences cover blocks in the mature producing areas, the round has extended the search into the UK’s remaining frontier areas. Total made a bold statement in the west of Shetland area, taking four licences covering 11 blocks or part-blocks, while Chrysaor also took a licence in this area. To the extreme west of the UK offshore, in the west of Hebrides area where only a few blocks are under licence, OMV signed-up for two licences covering 18 whole blocks - another bold statement.
But the most sought-after area was the central North Sea, where reprocessing existing seismic data and firming-up discoveries made in the early days has been good business for many operators. Awards extended the area under licence to the west of the basin at several points, notably with seismic company TGS taking two licences covering 11 blocks and part-blocks to the southeast of Aberdeen.
Interest in the northern North Sea focused on its northern margin, where larger operators took territory. In this area Shell was awarded two licences covering seven blocks and part-blocks, BP took one licence covering four part-blocks, GDF took a licence covering three whole blocks and Bayerngas won a licence covering one whole block and two part-blocks.
The southern North Sea also saw awards in its outer areas, with small companies Margin, Swift and Dess signing-up for blocks just off the East Anglia coast, while Arenite took blocks immediately off the Kent coast. Blocks on the northern part of the southern basin went to Cluff, Parkmead and Burgate.