Promote licenses bring new entrants to the North Sea

Offshore staff

(UK)-A number of new entrants to the North Sea have invested a total of $157 million for further exploration activities. This additional investment follows a series of 'promote' licenses issued by the UK's Department of Trade and Industry (DTI) in 2003.

In the recent record-setting 23rd Oil and Gas Licensing Round, 152 licenses were awarded, of which 76 were classified as promote. The promote licenses were issued at a tenth of the cost of traditional licenses for the first two years. These licenses were created to encourage smaller companies to apply for and explore acreage that would otherwise go unused and unexplored.

A total of 188 promote licenses have been awarded thus far in the past three oil and gas licensing rounds, and have brought 35 new entrants to the North Sea. The list of promote licensees includes companies such as Petro-Canada, Maersk Oil, and Kerr-McGee.

After the two-year period, the licensees have the option of discontinuing their licenses if exploration efforts prove unsuccessful or financing is not secured. However, the retention rate for these licenses has proved quite high, with 24 out of 54 promote licenses issued in 2003 continuing.

Work commitments from these promote licenses include 15 firm wells, 5 of which have already been drilled. In addition, 7 new seismic surveys with contingent wells will be spudded before the end of September 2007.

UK Energy Minister Malcolm Wicks said of the development, "it's a great vote of confidence in the future of the North Sea. These companies have come up trumps by successfully promoting or developing the acreage to attract investment. It is worth remembering-and I congratulate those companies which have successfully pushed forward activity in this manner."

11/11/2005