OTC: UK Energy Minister discusses investment opportunities for independents

By Paula Dittrick
Senior Staff Writer

HOUSTON, May 3 -- The UK North Sea is entering a new development phase with new investment opportunities for independent oil and gas companies, UK Energy Minister Stephen Timms told the Offshore Technology Conference on Monday.

The UK has devised new exploration licenses. Next month, the UK Department of Trade and Industry plans to launch digitally signed consents involving "paperless" agreements between the government and companies, Timms said. The first digitally signed documents will involve environmental permits, he said.

A panel discussion on independent operators and the future of the North Sea is slated Thursday at OTC. That panel will include Simon Toole, DTI director of licensing, exploration, and development.

"We are seeing renewed interest from a range of companies," Timms said, adding the UK "always welcomes global investment in the North Sea."

In 2003, the DTI estimated resources of oil and gas on the UK Continental Shelf ranging between 2-13.3 billion bbl and 8.3-49.1 tcf of natural gas.

"The majority of these lie in currently licensed acreage, providing opportunities for farming in to existing exploration commitments. However, a significant proportion of prospects remains in unlicensed acreage, in both mature basins and in frontier areas, the latter being mainly on the Atlantic margin to the northwest of the UK," DTI documents said.

22nd offshore licensing round
For instance, the upcoming 22nd UK offshore licensing round has established a new "Frontier" license that allows operators to apply for relatively large acreage on the UK's Atlantic margin or continental shelf west of the Shetland and Orkney islands at significantly reduced costs (OGJ, Feb. 23, 2004, p. 31).

Applications from the licensing round are due in early June, Timms told OTC luncheon participants. The Frontier license also gives operators more time to carry out the necessary exploration and development, extending that period for 2 years "over and above" the time allowed under a traditional license.

Timms emphasized the UK government's "commitment to innovate where possible and maximize the full potential" of oil and gas reserves on the UKCS.

The 21st round of licensing included a "Promote" license, which provided better incentives to small companies. "That was a new form of license to encourage a new breed of new prospectors," he said.

Meanwhile, the Frontier license was designed to offer benefits to more established North Sea players likely to prospect in the new blocks, he said.

The Frontier license will be offered only for those areas west of the Shetland Isles, comprising Areas 1 and 4 of the DTI's Strategic Environmental Assessment process. However, the exact areas for which the new license will be available have not yet been decided, officials said.

Traditional licenses also will be offered for the same areas west of the Shetlands and for all other areas included in the round, officials said. Promote licenses will be offered only in areas other than west of Shetlands.

Contact Paula Dittrick at [email protected]