Next UK offshore license round could launch in October

Offshore staff

LONDON — The UK government has completed its review of its Climate Compatibility Checkpoint consultation with the industry on new oil and gas projects. It could now launch the UK’s 33rd offshore licensing round early in October.

According to Offshore Energies UK (OEUK), hundreds of blocks could be offered for new oil and gas exploration and production (E&P) licenses.

The government had put the licensing process on hold since 2020 pending the results of the consultation, which outlined measures that could ensure future UK gas and oil developments are in compliance with UK climate emissions reduction targets.

OEUK had warned that delays in licensing could lead to declining oil and gas output, increasing the UK’s dependence on imports at a time of global energy shortages.

As the association pointed out in its recent Economic Report, only five UK exploration wells were drilled last year, the lowest since the UK North Sea sector was opened close to 60 years ago.

“We need new licenses now because the UK Continental Shelf is…a mature basin where many existing fields are in gentle decline," Mike Tholen, OEUK’s acting chief executive, said. “That means we rely on finding new oil and gas resources simply to maintain production at current levels. We need new E&P licenses so that we can find those reserves…New licenses also help maintain continuity for the energy operators and for our vital supply chain companies which, between them, employ nearly 200,000 people.

Analysis

Alyson Harding, technical manager, North West Europe E&P, Westwood Global Energy Group, cautioned that opening of the 33rd Round would not be a short-term fix for UK energy security.

Westwood’s analysis shows that for licenses awarded since 2002, the average time taken from award to first production is seven years (the full range is two to 15 years), and often many exploration and appraisal wells are needed to confirm the commerciality of discoveries.

Aside from the drop-off in recent UK exploration drilling, average commercial volumes discovered over the last five years has been less than 100 MMboe/year, Harding added.

“For exploration to make a difference, both activity levels and volumes discovered will need to improve significantly. In 2022 Westwood expects seven exploration wells to complete, and we currently have visibility of 10 exploration wells that are planned for 2023 as well as a number of appraisal wells," Harding concluded.

09.23.2022