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UK licensing round goes back in time

Mature UK acreage is up for grabs on improved terms, but attracting the explorers could still prove difficult

The year 1965 was an exciting time for the UK oil and gas industrythe fledgling sector's best years lay ahead and everyone was interested in taking a piece of the action. The view 50 years on is a little different, but the UK's Oil and Gas Authority (OGA) hopes to rekindle some of the same spirit in its latest licensing round. On offer is exploration acreage not visited since the heady days.

The 30th bid round, formally launched on 25 July, offers 813 blocks or part blocks in mature areas of the UK Continental Shelf (UKCS), covering a total area of 114,426 square km. The acreage lies in the southern, central and northern North Sea areas, as well as West of Shetland and the East Irish Sea. The round is open for 120 days until 21 November. Decisions are due in the second quarter of 2018.

"We are encouraging companies to take a fresh look at large areas of acreage, some of which has not been available since 1965," Andy Samuel, the OGA's chief executive said.

The OGA reckons that 10bn to 20bn barrels of oil equivalent remain under the UKCScompared to the more than 42bn barrels that have already been produced. But persuading firms to return to mature areas in the hope that gems will turn up that were missed first time round will be a tough sell in an era of more prudent spending. Last year's 29th licensing round, which focused on frontier areas, produced the lowest interest in 14 years: only 29 applications came in for 113 blocks, when a total of 1,261 blocks had been on offer.

The OGA is keen to stress that the much more detailed information and updated data packs available today means that mature acreage is worth investigating once more.

The authority's Innovate Licence is intended to lure companies by giving them more flexibility in setting the timetable for data processing, surveying and drilling. The fiscal regime is more attractive to drillers and the hope is that improved technology and greater drilling efficiency will keep costs down.

"These factors combined mean now is a very good time to invest on the UKCS," according to Samuel.

Whether the oil companies see things that way remains to be seen, but close collaboration between the licensing authority and the industry in developing the round should help generate some interest.

Mike Tholen, upstream policy director at industry association Oil & Gas UK, welcomed the high degree of consultation with explorers in developing the round, and said that improved efficiency and cost effectiveness provided the basis for it to be successful.

A more streamlined industry now getting used to $50 a barrel oil is in a better position than it has been since the oil price slide of 2014-15 to contemplate boosting UKCS exploration, but, as Tholen said, "cost-effective deployment of technology will be critical to the success of the round".

The focus on mature acreage in this round reflects the OGA's policy of alternating between frontier and mature areas in successive licensing rounds. The 31st edition is scheduled to return to frontier areas. The OGA says these will include areas covered by the government-funded seismic acquisition project of South West Britain and the East Shetland Platform.

More than 13,500km of new seismic data and approximately 20,000km of reprocessed legacy seismic data is scheduled to be released following the closure of the 30th Round.

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