OGA awards 25 UKCS licences in 29th Offshore licensing round

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The Oil and Gas Authority (OGA) is to award 25 licences for 111 blocks or part blocks to 17 companies in the 29th Offshore Licensing Round to enable further exploration and production across frontier areas of the UK Continental Shelf (UKCS).

The 29th Licensing Round was the first licensing round in two decades to focus solely on frontier, under-explored areas of the Rockall Basin, Mid-North Sea High, and part of the East Shetland Platform. It attracted applications from 24 companies for 113 blocks when it closed in October 2016.

All areas generated interest, with highlights including: three firm well commitments in the near-medium term, work programmes involving the application of new technology, and three new entrants to the UKCS. Two areas, Rockall and Mid-North Sea High, were the focus of the 2015 UK Government funded seismic acquisition programme which acquired an extensive new geophysical dataset. The OGA subsequently provided an openly available, subsurface data package allowing companies to identify and target a range of opportunities. This was cited by companies as critical to stimulating their applications.

Andy Samuel, OGA Chief Executive, said: “The £20 million investment in new seismic for the Rockall and Mid-North Sea High areas, subsequent release of 40,000 kilometres of new and reprocessed data, combined with the work of the MER UK Exploration Task Force in developing the Innovate Licence, and a stable and competitive fiscal regime has resulted in a number of quality applications in this frontier Licensing Round.

“We are particularly pleased to see firm well commitments, the targeting of new and under-explored plays, and first-time entrants to the basin, alongside a number of established companies, which will help stimulate further activity and value creation.

“While exploration activity has undoubtedly suffered as a result of the difficult market conditions, we are now seeing highly encouraging success rates and finding costs on the UKCS. This is testament to the value of a robust and focused exploration strategy with commitment from industry, government and the OGA.

“The upcoming 30th Offshore Licensing Round will focus on mature areas and is expected to be the most significant offshore round in recent decades. An extensive number of prospects and undeveloped discoveries will be on offer. Ahead of the launch, we will be releasing information packs on a number of these opportunities. The 30th Round is likely to be announced during the latter half of the second quarter of 2017, and will be open for 120 days.”

The OGA’s 2016 Supplementary Round closed for applications on 7 March 2017 and attracted fifteen applications for eleven blocks in all. Consideration will now be given to the applications, with awards to be announced later this year.

Mike Tholen, Oil & Gas UK’s upstream policy director, said:

“We welcome today’s announcement by the Oil and Gas Authority that it is to award 25 licences to companies seeking to explore for oil and gas across frontier areas of the UK Continental Shelf (UKCS).

“This 29th licensing round has the potential to open up new areas of the UKCS which have been under explored until now and the three firm commitment wells offered will help test the potential opportunities available.

“It is clear the flexible approach the Innovate Licence offers has enabled three new companies with different business models and fresh ideas to enter the UK in this round – a process which has gained greater impetus from the availability of new seismic data drawn from across Rockall and Mid-North Sea High, funded by the government two years ago.

“Frontier exploration is a long game which will take time to deliver new oil and gas resources. Fiscal stability to drive investment in exploration will be a prerequisite in the years to come, and the industry will continue to build on the competitive improvements achieved over the last two years to make this a success.”

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