UK DTI: Oil is Well Under the North Sea

Following a bumper year for oil and gas discoveries in the North Sea, Alistair Darling, the Secretary of State of Trade & Industry, today unveiled continuing record numbers of oil and gas licenses.

Offers of 150 oil and gas exploration and production licenses will today be issued to 104 companies covering 246 blocks - continuing the record numbers of licenses issued last year.

In announcing the awards, Alistair Darling said:

"This award matches last year's record breaking result and shows that by having a flexible and responsive licensing regime we are continuing to maximize the potential of the North Sea. There are potentially more than 20 billion barrels of oil and gas still available to be produced, which is good news for industry, our economy and energy supply."

"The oil and gas sector is one of the UK's most important industries and our role in awarding these licenses is to balance the continued development of the North Sea whilst respecting and minimizing the impact on our environment. In making the decision to separate four of the blocks from this round for further assessment, we can continue to capitalize on this record investment in the North Sea whilst allowing us to properly consider the important issues surrounding these blocks."

At the same time, latest figures from government show 2006 was a significant year for discovering oil and gas - the highest level since 2001. It is estimated that the equivalent of at least half a billion barrels have been discovered in 2006 and around 40% of exploration wells have found potentially commercial oil and gas accumulations.

Adding further to the good news, a significant number of the innovative "Promote Licenses" issued in the 22nd Oil and Gas Licensing Round will continue into their third and fourth years. 23 such Licenses from the 22nd Round awards (out of 58 originally issued) will continue, to include commitments of 13 firm wells and 10 new seismic and contingent wells.

The "fallow" initiative continues to play a key role in forcing unworked blocks back into play: 52 of these are being taken up by new owners. Since 2002, a total of 75 wells have been drilled on fallow blocks or discoveries.

24th Oil & Gas Licensing Round Notes:

1. The Round closed on 16th June 2006.

2. License awards data:

                                            23rd Round  24th Round
Number of Licenses being awarded               151          150
Traditional                                    70            79
Frontier                                        6             6
Promote                                        75            65
Blocks being awarded in all                    259          246
No. of Companies being offered an award         98          104
Of which are newcomers to UKCS                  28           17

3. Four blocks, in Cardigan Bay (106/30, 107/21 and 107/22) and the Moray Firth (17/3) which are close to, or on, certain Special Areas of Conservation that were applied for in the 24th Round have been the subject of representations to the DTI regarding dolphins located in or near them. In order to consider these concerns the DTI is deferring decision on whether or not to award. A further "Appropriate Assessment" will be conducted to include these blocks and will be consulted on before any decision is made.

Promote Licenses

4. Of the 58 Promote Licenses issued in the 22nd Round in 2004, 23 will continue. Details of those that will continue into a new phase are set out at the foot of this press notice. Those licenses that are not being carried forward will be made available in the next offshore round. Work commitments include 13 firm wells (2 of which have already been drilled) and 10 new seismic surveys with associated contingent wells to be spudded before the end of November 2008.

5. DTI created the Promote License - offered at a tenth of the cost of a traditional license for the first 2 years - to encourage smaller companies with good ideas to apply for acreage and work up prospects to either sell on or bring in other investors. 252 promote licenses have been awarded so far; 54 in the 21st Round, 58 in the 22nd, and 75 in the 23rd Round.

6. The continuing Promote licenses are:


P1199 (amalgamated with P1064) - new seismic and contingent well (S&C)
P1200 - firm well (W)
P1203 - S&C
P1207 - S&C
P1208 - S&C
P1211 - S&C (amalgamated with P1288)
P1212 - W
P1214 - S&C
P1220 - W (already drilled - Sheryl discovery)
P1221 - W
P1225 - S&C
P1228 - S&C
P1230 - W
P1231 - W
P1233 - W
P1237 - S&C
P1239 - W
P1241 - W
P1242 - W
P1243 - W
P1245 - S&C
P1246 - W
P1253 - W (already drilled - Oak discovery)

View complete list of the license award offers by downloading this 58KB PDF file.

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