Independents favored in latest UK offshore licenses

Offshore staff

LONDON – Britain’s government has awarded a further 52 oil and gas licenses under its 27th licensing round, bringing the total number of awards offered to a record 219.

These include licenses for 21 smaller independents new to the UK offshore sector market, three times the total issued to independents in the previous round.

Energy Minister Michael Fallon said the government was working closely with the industry to implement the fiscal and regulatory incentives needed to stimulate more exploration by smaller independents.

“Some 20 billion more barrels of oil and gas could be produced,” he claimed, adding that the government intends to launch a 28th offshore licensing round early in 2014.

Recently introduced measures include increasing the size and scope of the small field allowance. In addition, the PILOT Exploration Taskforce has been working to encourage smaller companies to explore under-developed areas of the UK North Sea.

Oonagh Werngren, Oil & Gas UK’s operations director, said: “Improving both the number of wells drilled in the UKCS [UK continental shelf] and improving exploration success rates are key issues for both the industry and government. With the right business environment, there remains a strong future for the North Sea, and it is crucial that companies are encouraged to overcome challenges and continue to capitalize on underexplored areas.”

Among the award winners, London-based InfraStrata was offered two petroleum licenses. One covers the offshore extension of the company’s PL1/10 license area in Northern Ireland, and the other is adjacent to its P1918 license offshore Dorset, southern England.
Last week Dorset County Council gave Infrastrata planning permission for the California Quarry-1 exploration well, which will be drilled directionally from onshore into P1918.

Independent Oil and Gas (IOG) was offered a 100% interest in blocks 48/23c and 48/24b, both 10 km (6.2 mi) east of the proposed Blythe development in which the company is a 50% partner.

IOG will acquire and reprocess 85 sq km (33 sq mi) of existing 3D seismic data over the blocks. It has identified two potential structures in the area in the Rotliegend sandstone, one of which delivered gas shows from a well drilled by Arco in 1984. The company is looking for further discoveries that could tieback to the future Blythe complex.

Serica Energy has secured a license for block 113/22 in the East Irish Sea off northwest England. This is adjacent to the company’s block 113/27c containing the Doyle Triassic gas prospect, a fault and dip closed structure which could extend into the new license.

Work commitments include obtaining 150 km (93 mi) of 2D seismic data and a drill-or-drop decision within three years.

In June, Serica agreed to farm out part of its interest in blocks 113/26b and 113/27c to Centrica subsidiary Hydrocarbon Resources Ltd. (HRL), with HRL agreeing to cover Serica’s share of the costs of the well on Doyle up to $17 million gross. The farm-out arrangement extends to the new license.

Drilling on Doyle could start late next year, although Serica chairman Tony Craven Walker pointed out that further agreement is needed with the operator of a nearby wind-farm project before the well can get under way.

12/2/2013

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