New Licensing Round Will Not Be Short Term Fix for UK Energy Security

New Licensing Round Will Not Be Short Term Fix for UK Energy Security
The new offshore UK licensing round will not be a short-term fix for UK energy security, according to Westwood Global Energy Group.

The new offshore UK licensing round will not be a short-term fix for UK energy security, according to Alyson Harding, Westwood Global Energy Group’s Technical Manager for North West Europe E&P.

“The UK Government has announced that it has reviewed the Climate Compatibility Checkpoint and that a 33rd Offshore Licensing Round would be compatible with the UK climate objectives. It is expected that the opening of the round will be announced in October, however, this will not be a short-term fix for UK energy security,” Harding said in a statement sent to Rigzone.

“Westwood analysis shows that for licences awarded since 2002, the average time taken from award of the licence to first production is seven years (range two to 15 years) and requires the drilling of many exploration and appraisal wells to confirm commerciality of discoveries,” Harding added.

In the statement, Harding highlighted that exploration in the UK has been at an “all-time low” in the last few years “with just five wells in 2020 and four in 2021, the fewest to complete in any one year since exploration began in the 1960s”.

Average commercial volumes discovered over the last five years has been “low” at less than 100 million barrels of oil equivalent per year, Harding outlined, adding that, “for exploration to make a difference, both activity levels and volumes discovered will need to improve significantly”.

Harding noted that, in 2022, Westwood expects seven exploration wells to complete and said the company currently has visibility of 10 exploration wells that are planned for 2023 “as well as a number of appraisal wells”.

Rigzone has sent an email to the UK department for Business, Energy and Industrial Strategy (BEIS) asking for comment on Harding’s statement. The BEIS has not replied with a comment at the time of writing.

The BEIS announced on Thursday that, to bolster the UK’s energy security, the government has lifted the moratorium on shale gas production in England and confirmed its support for a new oil and gas licensing round.

The new licensing round is expected to be launched by the North Sea Transition Authority (NSTA) in early October, according to BEIS, which highlighted that this round is expected to lead to over 100 new licenses. The NSTA is expected to make a number of new ‘blocks’ of the UK Continental Shelf available for applicants to bid for licenses, BEIS revealed, adding that these licenses will enable developers to search for commercially viable oil and gas sources within their areas.

To contact the author, email andreas.exarheas@rigzone.com


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