U.K. Energy Minister Charles Hendry announced the latest offshore licensing round on Feb. 1 for U.K. oil and gas exploration. There are 2,800 blocks being offered in the 27th round.

The 26th round was held in 2010, which resulted in the award of 190 licenses, the largest number issued since offshore licensing began in 1964.

“This is shaping up to be a very prosperous year for the North Sea as we expect a substantial increase in field approvals. With around 20 billion barrels of oil still to be extracted, the U.K. continental shelf has many years of productivity left,” Hendry stated. “The industry supports nearly half a million jobs and today’s announcement will ensure a wealth of outstanding long-term career opportunities for people of all ages from northeast Scotland right across the U.K.”

The round closes for applications on May 1, 2012.

Before any licenses are awarded, the Department of Energy and Climate Change (DECC) will carry out a screening exercise to assess whether the activities likely to result from the issuance of oil and gas licenses will have significant effects on any protected nature conservation.

The government hopes to generate the same or higher level of interest in the U.K. North Sea with the next round.

Although the 26th round was held in 2010, the final licenses were not awarded until the end of 2011. These 46 blocks were part of a second tranche that required additional examination before being issued.

“These continued high levels of interest, and the award of these licenses on Dec. 30, gives me yet more reason to be optimistic for a prosperous 2012 for the U.K. oil and gas sector,” Hendry emphasized.

While majors such as Shell, Esso and GDF Suez participated in the second tranche, the majority of companies winning blocks were mid-sized and smaller companies. The reaction of those companies to receiving licenses was very consistent and enthusiastic.

Providence Resources’s U.K. subsidiary PR Singleton Ltd. won six blocks in the Rathlin Basin, offshore Northern Ireland. The initial license phase is for six years with a well required to be drilled during that period.

Tony O'Reilly, Providence chief executive, noted, "We are very pleased to have been offered additional offshore acreage in the Rathlin Basin, which in conjunction with the license secured over Rathlin Island in 2010, gives Providence the leading offshore acreage position in this emerging basin.”

Serica is another mid-size independent that received a further two production licenses in the second tranche.

"We intend to seek a partner to join us in East Irish Sea Block 110/8b with a view to extending the exploration program in this block and have already commenced discussions. In the southern North Sea, the blocks offered for award lie very close to the York field. We expect them to contain additional gas reserves which, if proven, can easily be produced through the York field facilities," explained Tony Craven Walker, chairman and interim chief executive officer (CEO).

Dana Petroleum in a 50/50 partnership with Sorgenia E&P (UK) Ltd. secured blocks 42/27, 47/2b (split) and 47/3g (split) in the southern U.K. North Sea. The company noted it already has the second largest acreage position in the North Sea and is planning an extensive drilling program during 2012.

“Our drilling program for 2012 will include six exploration wells in the North Sea and West of Shetland as we seek to further enhance our strong reserves position," emphasized Dana's U.K. managing director, Paul Griffin.

Bridge Energy was awarded Block 49/21c in the North Sea. Jim Brunton, Bridge U.K. managing director, noted, “Given the location of the block in this prolific and productive sector of the U.K. gas basin surrounded by the Leman, Vulcan and Valiant gas fields, we are confident in the prospects that we have mapped on the license."

Northern’s NP Solent Ltd. subsidiary won Blocks 98/13 and 98/14, which are offshore adjacent to Northern's Isle of Wight onshore license, PEDL 240. The part blocks cover the offshore extension from PEDL 240 of a prospect that has been mapped prior to 2008 using both seismic and well data and is located in the same petroleum basin as the Wytch Farm oil field

“This allows the joint venture to evaluate the oil and gas potential of the mapped, well-defined prospect that extends from the Isle of Wight into the English Channel,” explained Derek Musgrove, Northern managing director.

North Sea Energy, together with its partners, was awarded three new blocks that contain the Norfolk prospect and the Badger lead.

The blocks are in the Inner Moray Firth, a short distance from the Sutherland coast. The Norfolk prospect is a large stratigraphic pinchout and dip closure with a Lower Cretaceous Hauterivian Sandstone reservoir with upside oil initially-in-place.

With the strong showing in the previous round, independents are also expected to be aggressive in the newest round.

Contact the author, Scott Weeden, at sweeden@hartenergy.com.

Offshore