UK Government

Department of Energy and Climate Change: Record acreage announced in latest licensing round for offshore oil and gas exploration

Press Release   •   Jan 27, 2010 10:46 GMT

A new round of offshore licensing will give a further boost to the UK’s offshore oil and gas industries, Energy and Climate Change Minister Lord Hunt said today. Lord Hunt was in Fife visiting an oil platform manufacturing yard as he launched the 26th offshore licensing round to allow for oil and gas exploration in UK waters.

A new round of offshore licensing will give a further boost to the UK’s offshore oil and gas industries, Energy and Climate Change Minister Lord Hunt said today. Lord Hunt was in Fife visiting an oil platform manufacturing yard as he launched the 26th offshore licensing round to allow for oil and gas exploration in UK waters.

For the first time since 1998, this round also offers blocks in all areas of the UK seas for new licensing.

The blocks offered include a number relinquished under the Government and industry’s 'Fallow Initiative', which  stimulates activity on blocks where there had been no significant activity for three years.

Lord Hunt said:

"This record-breaking 26th Round includes areas of the Continental Shelf not as yet explored, and will provide a new boost to activity in the basin.

“The round will help to secure the future of the UK's oil and gas industry which still  provides three quarters of our energy needs and some 350,000 jobs.
“Estimates suggest there are still around 20 billion barrels of oil equivalent, or possibly more, to be produced, and this latest licensing round will help ensure we realise this potential.

“As we make the transition to a low carbon future, we must ensure we have secure energy supplies by making the best use of our indigenous energy resources in a safe and environmentally sound way.”

14 blocks that were classified as "fallow" in 2009 have either been fully, or partly, relinquished in time to be on offer in this round.

In addition, the majority of areas licensed in the 1st Round in 1964 that have not been allowed extensions have been relinquished and are included for offer in the 26th Round.

The Government has also introduced a new Frontier licence with an extended nine year exploration term for the West of Scotland area, which aims to encourage  oil and gas exploration in an area in which geological data is as yet scant.

In deciding which areas to offer for licensing, DECC  conducted a thorough Strategic Environmental Assessment (SEA) of UK waters.

DECC has accepted the SEA’s recommendations that licensing may proceed subject to some areas being  withheld from licensing for the moment due to lack of information.

Before any licence awards are made, an environmental assessment under the Habitats Directive will be carried out.

Notes to editors

1. Following an extensive Strategic Environmental Assessment (SEA), blocks to the west of Rockall have been excluded from the 26th Round.

2. The Blocks within the Moray Firth and Cardigan Bay areas which were offered as part of the 24th Licensing Round and are the subject of an ongoing public consultation on the draft Appropriate Assessments have also been excluded from the 26th Licensing Round.

3. Additionally, before any licence awards are made, DECC will assess whether activities carried out under licences applied for in the 26th Round will have significant effects on the integrity of any Natura 2000 sites. This is required by the legislation implementing the Habitats and Wild Birds Directives.

4. Any licences awarded in the 26th Round will contain conditions to protect environmental interests and those of other sea users. In addition, activities carried out under the licences will be subject to a range of legislation which is designed to protect the marine environment, including legislation which implements the Environmental Impact Assessment Directive and the Habitats and Wild Birds Directives in respect of offshore oil and gas activities.

5. 9 whole blocks and 5 partial areas were relinquished in 2009 as a result of the PILOT Fallow Initiative which required that once the primary term of the licence has passed, the companies must have drilled wells, shot new seismic or carried out other significant activity in order to retain the acreage. These will now be on offer in the 26th Round.

6. The SEA report can be downloaded from: www.offshore-sea.org.uk

7. Details of the types of licences on offer in the 26th Round.

LICENCE TYPE

Traditional Licence
The Traditional Seaward Production licence has an initial term of four years (for exploration), four more years (to draw up and submit a Field Development Plan), and a production period of 18 years, which can be extended. An applicant for a Traditional Licence must demonstrate technical, financial and environmental capacity. This allows drilling operations to commence almost immediately, pending necessary consents.

Frontier Licence
A Frontier Licence differs from Traditional licence in that each of its three terms is slightly longer (6+6+20 years instead of 4+4+18), in recognition of the greater challenges facing companies operating in frontier areas.  The rental rates in the first three years are reduced by 90% so that such Licences are not prohibitively expensive while they cover large areas.

Frontier Licence West of Scotland
This Frontier Licence differs from the current Frontier  licence in that the first of its three terms is three years longer (9+6+20 years instead of 6+6+20). This is in recognition of the particularly challenging nature of this area and the relative scarcity of geophysical data. As per the current Frontier licence the rental rates in the first three years are reduced by 90% .

Promote Licence
The Promote Licence offers the licensee the opportunity to assess and promote the potential of the licensed acreage for an initial two-year period without the stringent entry checks required as part of a traditional licence (Promote Licensees will not, of course, be allowed to do exploration Operations work until those checks have been passed). For the period of this assessment, to a maximum of two years, the licence rental fee will be 10% of the rental fee for the traditional licence.

8. The Department of Energy and Climate Change is central to the UK Government’s leadership on climate change.  We are pushing hard internationally for ambitious effective and fair action to avert the most dangerous impacts.  Through our UK Low Carbon Transition Plan we are giving householders and businesses the incentives and advice they need to cut their emissions, we are enabling the energy sector’s shift to the trinity of renewables, new nuclear and clean coal, and we are stepping up the fight against fuel poverty.

Contacts

 NDS Enquiries
Phone: For enquiries please contact the above department
ndsenquiries@coi.gsi.gov.uk