The U.K. Continental Shelf (UKCS) may not be the hottest spot for oil and gas operators worldwide, but results from the latest offshore licensing round prove the area still has the attention of investors.

The government announced Nov. 6 that 134 production licenses covering 252 blocks have been offered as part of the 28th offshore licensing round, which made available acreage in the North Sea, West of Shetland, English Channel, North Channel and Morecambe Bay areas.

“This successful licensing round, which is on track to be one of [the] biggest rounds ever in five decades, is a boost for the U.K. economy and shows that our long-term economic plan is working,” U.K. Business and Energy Minister Matthew Hancock said in a prepared statement. “We are creating more jobs by backing business with better infrastructure investment. Industry [members] are scrambling over themselves to invest in the U.K. and explore for energy.”

Licenses for 94 of the blocks near conservation and special protection areas, however, must undergo environmental assessments before offers are made.

Of the areas where blocks were available, the central area of the North Sea appeared to capture the most interest, followed by the northern and southern area along with the West of Shetland area.

Statoil added nearly 8,000 sq km (309 sq miles) to its position in the UKCS, having been awarded interest in 12 new licenses and securing operatorship for nine of those licenses. Eleven of the licenses are in the North Sea, including parts of the central North Sea near the Mariner and Bressay developments. The newly gained North Sea acreage also includes land in the northern margin of the Mid North Sea High (quadrants 37 and 38) and in the Halibut Horst area (quadrants 13 and 14), Statoil said on its website.

“This new acreage holds the potential for new high-value barrels in our greater North Sea core area, both near our existing heavy oil projects and in new areas,” said Statoil’s Erling Vågnes, senior vice president for exploration. The remaining license is in the West of Hebrides area, a relatively underexplored play with known geologic provinces that include the North and South Rockall and Hatton basins as well as the Rockall Plateau and Hatton Continental Margin, according to information from the Pilot Exploration Task Force.

Maersk Oil also was among the more than 60 companies with awards. The company said it landed five licenses in the initial tranche of offers, three of which it will operate.

“Two of the licenses awarded, 15/18b and 15/20d include the Yeoman and Tap o’Noth discoveries near Maersk Oil’s Quad 15 core producing assets,” the company said. “The awarded Glengorm and Sween licenses comprise high-pressure/high-temperature (HP/HT) prospects and discoveries, respectively.”

In all, the majority of the licenses awarded have obligations to obtain 3-D, or in some instances 2-D, seismic data and reprocess existing 2-D and 3-D seismic data. The information from the U.K. Department of Energy and Climate Change (DECC) also showed commitments for only six firm wells—one each from BG, BP, E.ON E&P, Nexen, PA Resources and Summit—and four contingent wells.

“The disappointingly low number of wells highlights the need to stimulate new plays through detailed technical work, which requires measures to encourage more investment in the UKCS,” said Oonagh Werngren, Oil & Gas U.K.’s operations manager. “The industry is facing a number of major challenges, including the lowest level of exploration for some time and rising costs in the sector. It is extremely important to ensure the award of these licenses translates into the drilling of more successful wells on the UKCS, and we need to ensure the pipeline of new developments continues to flow from the basin.”

“On a more positive note, it is encouraging to see companies beginning to look seriously at frontier areas, stepping away from the known basins and into deeper water,” Werngren continued. “We also note licenses for 94 blocks in the licensing round are in, or close to, areas under special protection and conservation. We would encourage the government to carry out environmental assessments urgently so that these additional areas (with all measures implemented to protect the environment) can contribute to boosting activity in the basin.”

The licensing round comes as the U.K. continues work to increase production as output from North Sea fields falls. Recommendations on how to boost development were outlined in a report by Ian Wood. Among the suggestions was establishing a new oil and gas industry regulator, which has since been named the Oil and Gas Authority (OGA). DECC named Andy Samuel, who is currently managing director for European E&P for BG Group, as CEO of OGA.

Fully implementing recommendations in the Wood Review could lead to the production of an additional 3 Bboe to 4 Bboe over the next 20 years, according to the DECC’s website.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

Offshore