UK names companies to explore 12 West of Shetlands blocks

May 8, 2001
The British government Tuesday opened the door to exploration of 12 offshore blocks in the West of Shetland area with announcement of the winners of the country's long-delayed 19th licensing round. Amerada Hess Ltd. and Texaco North Sea UK Co. won most of the licenses in the area between the Shetland and Faeroes Islands.

LONDON, May 8 -- The British government Tuesday opened the door to exploration of 12 blocks in the West of Shetland area of the UK Continental Shelf, with the announcement by Energy Minister Peter Hain of the winners of the long-delayed 19th licensing round.

Amerada Hess Ltd. and Texaco North Sea UK Co. won most of the offshore license awards, which cover blocks in the region of the UKCS that lies between the Shetland and Faeroes Islands formerly known as the "White Zone."

Texaco was awarded operatorship of five blocks -- 204/17, 213/5, 214/1, 21/26, 213/27 -- and a stake in 204/9, while Amerada Hess was granted the right to operate Blocks 176/20, 204/9, 204/16, and 204/21. Phillips Petroleum Co. UK Ltd. (Block 176/25), BP Exploration Operating Co. Ltd. (Block 204/18) also won operatorships in the round.

BG International Ltd., Statoil UK Ltd., Veba Oil & Gas Ltd., Dong Efterforskning og Produktion OMV UK Ltd., Conoco UK Ltd., Shell UK Ltd., and Intrepid Energy North Sea Ltd. each picked up an interest in at least one block.

The government had delayed the licensing round for extensive consultation with environmental groups, wildlife charities, and oil companies. Formal award of the blocks will occur after the Offshore Petroleum Activities (Conservation of Habitats) regulations take effect May 31.

"We have worked long and hard to ensure that the requirements of the Habitats and Birds Directives are properly applied to the decision-making process for oil and gas activities," said Hain. "We know have a workable and highly effective system for protecting rare habitats in UK waters while encouraging responsible developments of the UK's valuable energy resources."

The energy minister stressed that the license awards had been determined "on the basis of the technical merits of the applications and the financial and environmental capabilities of the companies involved in them."

He said the new regulations would also mean a "substantial improvement in the transparency" of the UK's environmental and licensing regimes.

The licenses will call for at least seven wildcats to be drilled in the White Zone.

James May, director general of the UK Offshore Operators Association, said the awards will be "a boost for fresh investment in the UKCS."

"The license areas represent a significant opportunity for new hydrocarbon exploration," he stated. "The industry is optimistic that these areas hold the potential to extend the life of the UK's offshore industry as fields in the North Sea decline, preserving jobs, supporting local economies, and maintaining an indigenous energy supply for the nation."

May noted that exploration and production on new blocks would provide a technological challenge to operators, as water depths are among the deepest to be found around the British Isles -- up to 1,700 m -- weather conditions "extreme," and the geology complex.

The UK oil industry has drilled 150 wildcats in the region during the last 25 years, has brought three oil fields -- Foinaven, Schiehallion, and Loyal -- into production, and plans to bring a fourth, BP Clair, on stream by 2004.

UKOOA estimates reserves in the region at around 1.5 billion bbl, equal to some 5% of all UK oil finds so far.