OGA launches 29th offshore licensing round with “frontier areas” on offer

The UK Government has increased low carbon industry funding.
The UK Government provided £40m worth of funding for seismic surveys in the North Sea in 2015 and 2016.

The UK’s oil and gas industry regulator today launched the 29th offshore licensing round with blocks in a number of “under-explored, frontier areas” up for grabs.

In total, 1,261 blocks have been made available during the round, which will be open to applications until 2pm on October 26.

The competition will give the Oil and Gas Authority (OGA) a clearer picture of the merits of a seismic survey programme carried out last year using £20million of UK Government funds.

An area about the size of the British Isles was covered as part of a campaign aimed at reinvigorating exploration drilling, which has fallen to its lowest level since the 1960s, when North Sea industry started.

The area included the Rockall Trough to the north-west of Scotland and the mid-North Sea High region, exploration of which had been limited, partly due to a lack of data coverage.

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The study finished in October, with data packages made freely available through the OGA in April.

Since then, the data has been downloaded more than 3,000 times, but whether that interest will be converted into applications for licences remains to be seen.

The 29th round will also help the OGA gauge the extent to which companies’ appetites for exploration have been dented by low oil prices.

The previous licensing round proved to be one of the busiest since the inaugural competition took place in 1964, with a total of 175 licences covering 353 blocks handed out.

Applications for the 28th round were lodged when it opened at the start of 2014 – well before the price of crude started falling.

OGA chief executive Andy Samuel said yesterday the new seismic data meant the current round should attract plenty of applications despite the “difficult market conditions”.

Mr Samuel also believes steps taken to make the licensing regime more flexible will help attract applications.

The 29th round marks the introduction of the “innovate licence” concept, which, among other things, implements a “stage-gate process” for better monitoring of progress than the previous regime.

Mr Samuel said: “The £20million Government-funded seismic acquisition programme sparked interest in the Rockall Trough and Mid-North Sea High areas and this licensing round now makes these under-explored frontiers available.

“The combination of, for the first time, freely available seismic data and the flexible innovate licence is a compelling package and the result of many months of collaboration between the OGA and industry to stimulate further drilling and maximise economic recovery of the UK’s oil and gas resources.”

Baroness Neville-Rolfe, minister of state at the Department for Business, Energy and Industrial Strategy (BEIS) – which replaced the Department of Energy and Climate Change (Decc) earlier with month – said the seismic campaign had “highlighted more of the opportunities that are still out there in the UK continental shelf”.

“We now look forward to companies taking advantage of these newly discovered sites and all the potential that they offer,” she added.

No specific date has been set for the announcement of the awards, but companies could be informed as early as the first quarter of 2017.