New UK energy minister offers more opportunities

In one of his first announcements as new UK Energy Minister, Mike O'Brien gave the country's oil and gas industry a boost with offers from the 22nd Offshore Licensing round.

In one of his first announcements as new UK Energy Minister, Mike O'Brien gave the country's oil and gas industry a boost with offers from the 22nd Offshore Licensing round. This new bid offering includes 97 offshore licenses. Of the 58 companies offered licenses, 15 are potential newcomers to the North Sea.

The 22nd Offshore Licensing Round awards include 32 traditional offshore production licenses, seven 'Frontier' licenses, and 58 'Promote' licenses covering 163 blocks in all. There were also 26 onshore licenses awarded.

Speaking to industry executives at a Royal Bank of Scotland Conference in Aberdeen, O'Brien said this announcement is "proof positive of the investment, exploration, and development potential still to be exploited in the North Sea and West of Shetland."

"Our progressive and innovative licensing system is proving a real success in attracting international attention to the North Sea. The new 'Promote' license goes from strength to strength improving on the interest of last year, with 58 of the 97 license offers going to 'Promote' applicants," O'Brien said.

The 'Promote' license offers the licensee the opportunity to assess and promote the prospectivity of the licensed acreage for an initial two-year period without the stringent entry checks required as part of a traditional license. For the period of this assessment, to a maximum of two years, the license rental fee is 10% of the rental fee for the traditional license. This type of license is particularly attractive to newcomers to the North Sea.

Interestingly, it is not only new, smaller independent players that are looking to invest in the North Sea. This bidding round also includes the new 'Frontier' license, designed to stimulate renewed interest in the area West of Shetlands. Seven license applications covering 27 blocks are proof that this incentive has also been well received by the industry.

The 'Frontier' license allows companies to apply for relatively large amounts of acreage and then relinquish three quarters of the acreage after an initial screening phase, during which the normal rental fees are discounted by 90%. The exploration and development periods are extended by two years over and above those stipulated for the traditional license. This new license is solely for the acreage West of Shetlands.

The DTI has announced that it is will soon write to operators relieving them of the need to submit an annual license return and will introduce the principles of e-government to expedite the process of relinquishing licenses.

9/15/04

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