Awards announced for 29th Offshore Licensing Round

The UK’s Oil and Gas Authority (“OGA”) has offered 25 licences to 17 companies covering 111 blocks or part blocks following its 29th Offshore Licensing Round. The Round was launched on 27 July 2016 and closed on 26 October 2016, attracting applications from some 24 companies. Winners include Statoil, Alpha Petroleum, ExxonMobil, Shell, BP, Centrica, and Azinor Catalyst.

Frontier exploration

Notably, this was the first licensing round in two decades to solely target frontier, under-explored areas of the UKCS. OGA has sought to enable further exploration and production across part of the East Shetland Platform, the Rockall Basin, and the Mid-North Sea High. The latter two areas formed the focus of a 2015 Government-funded seismic campaign which sought to spotlight underexplored areas and increase data coverage. The result of this £20 million investment was the acquisition of extensive new geophysical data. OGA released 40,000 kms of new and reprocessed freely-available data packages, which were downloaded more than 3,000 times.

The Innovate Licence

The 29th Licensing Round also signalled the launch of the ‘Innovate Licence’. This new concept allows for greater collaboration between licensees and OGA. Developed by the MER UK Exploration Board (an industry task group focused on increasing flexibility in the UKCS licensing regime) this new licence allows parties to pitch a ‘tailor-made’ optimal work programme to OGA. Whilst elements of the ‘Innovate’ notion were introduced as part of the 29th Round, OGA is of the opinion that in order to introduce the full benefit of the concept, amendments must be made to the model clauses contained in the Petroleum Licensing (Production) (Seaward Areas) Regulations 2008. A consultation on those proposed amendments closed on 6 January 2017 and a formal OGA response is now awaited. For more information on the Innovate Licence, see our previous Law Now.

Going forward

Faced with challenging climate conditions, OGA has sought to kick-start exploration in the UKCS. In so doing, its efforts have included the implementation of a frontier focus, release of new seismic data, and development of a new licence type. OGA states that these activities have contributed to applications made in the 29th Round, with highlights including “three firm well commitments in the near-medium term, work programmes involving the application of new technology, and three new entrants to the UKCS”.

Flexibility in approach, along with a stable fiscal and regulatory regime, will be paramount to driving investment in the UKCS. OGA seeks to build upon this in the upcoming 30th Offshore Licensing Round. The 30th Round is to focus on mature areas and will be, according to OGA, “the most significant offshore round in recent decades”. The 30th Round is expected to be announced during the latter half of Q2 2017 and will be open for 120 days.

Co-authored by Nikola Tait, trainee solicitor.