Energy Voice sat down with the Oil and Gas Authority’s director of exploration and production, Gunther Newcombe, to discuss how the 29th licensing round differs from previous rounds and learn more about its many North Sea firsts.
1) How has OGA sought to support the exploration sector?
In January, the OGA welcomed the UK Government’s funding for another £20m seismic round to be undertaken in 2016.
Building on this we recently launched a frontier basins Exploration Licence competition to deliver innovative data analysis and interpretation from industry and academia.
The winning studies will greatly increase our understanding of the areas which will be included in the 29th Licensing Round, to be announced later this year, subject to Strategic Environmental Assessment (SEA).
Find out more information on the competition here:
https://www.contractsfinder.service.gov.uk/Notice/8dad1f77-363d-4c2a-ae61-e78983181c71
We have also committed to providing £700,000 of Government funding to the development of a 3D visualisation facility at the Lyell Centre, which will open in June of this year, a joint venture between the British Geological Survey and Herriot-Watt University in Edinburgh.
2) When will 2015 seismic data be released?
The 2015 seismic data, also including gravity and magnetic maps and well data, is due to be released on 31st March.
This is the first time such large quantities of data have been made freely available to all.
Almost 40,000 km of new and legacy seismic data, some of which will be reprocessed, will be published via the Common Data Access (CDA) UKOilandGasData portal. The whole process from funding announcement to data delivery has taken just 12 months, a great achievement for all involved.
3) When will 2016 seismic acquisition begin and covering which areas?
The next seismic acquisition will begin mid-year with tendering in Q2 2016. Acquisition, processing and reprocessing must be completed by the end of March 2017.
We are consulting with industry on areas to be covered but interest so far has been shown in the East Irish Sea Basin, South Celtic Sea, South West Approaches Basin and Orcadian Basin.
The focus on under-explored frontier areas allows the application of modern exploration techniques and ideas to regions that have received minimal attention for decades.
In the South West Approaches Basin for example, no seismic has been acquired in the last 20 years with no wells drilled since the 1980s. The potential is exciting.
4) When will the 29th Round open?
The 29th Round will open in Q3 2016, depending on the outcome of the SEA.
It will focus on under-explored frontier areas, specifically the Rockall Basin, Mid-North Sea High Basin and East Shetland Platform. The 30th Licensing round will follow in 2017, and will focus on more mature areas.
5) How did OGA develop the new licensing regime for the 29th Round?
We brought together a diverse industry task group with representatives from a range of company sizes and technical strengths to develop a new approach in collaboration with our own exploration and licensing team.
6) What were issues with previous licensing regime?
Feedback we received from industry highlighted that the previously available licences were too restrictive and were not all available everywhere.
Often, licensees did not have sufficient time in which to complete their work programmes.
For example, the Promote licences only offered a short 2-year window in which to secure funding to support drilling activity which in the current market, put a lot of pressure on small E&P companies.
7) What is the inspiration and reasoning behind the Innovate License?
The Innovate Licence offers a flexible and pragmatic approach to licensing. It will allow phasing of licences that is appropriate for the work programme, allow tracking and monitoring of progress and lower barriers that occur during the licence lifecycle.
8) What are the advantages of the Innovate Licence?
The Innovate Licence offers:
Greater degree of flexibility
– Operators can design the Licence timeline around their Work Programme, rather than the other way around
– The maximum period of the licence is nine years and the three sub-phases can be split however the Licensee wishes as long as there is a well before the end of the initial period (i.e. in the final phase, Phase C)
– Previously, there was fixed relinquishment for an area but this is now open for discussion between Licence holders and OGA. Each will be determined on a case by case basis.
– Innovate Licence applies to any area rather than previous regime i.e. Frontier 9 was only applicable to SEA Area 7, Promote was only applicable to the old SEA area 2,3,5 and 6 (also in future there will be a single SEA – OESEA3)
– More rigorous tracking of work progress by the licensee, and if the programme deviates from the targets set out in the work programme, the OGA will be able to enforce remedial action or apply sanctions.
Lower entry hurdles
– Reduced access costs compared to previously.
– Deferred Capacity/Competence Tests. Innovate Licence holders will be able to retain a license for an extended period of studies or seismic work before having to prove Financial Capacity, and Technical, Environmental and Safety Competence. Tests will, where possible, be applied at the most appropriate points in the Licence’s Initial Period.
Broader Areas
– Available everywhere on UKCS, Larger Tranches on Offer to Promote Licensees.
Lower farm in hurdles:
– Innovate Licence holders will be able to continue a licence into the next phase by obtaining a farminee to finance new shoot seismic, or through self-funding, which is less onerous than committing to a well, as with current Promote Licences.
9) How will licensing rounds alternate in the future?
The 29th Frontier Round will be followed by the 30th Round, which will focus on mature acreage. The OGA may continue with this model in the future.
10) What the advantages of this approach?
This approach drives companies to focus on Frontier Acreage assessment outside of their usual core areas, thereby leading to idea creation and diversifying activities and portfolios.
It also allows time for acreage to be relinquished so that more coherent mature areas can be offered for licensing.
11) Is this used in any other basin?
Yes, Norway has Awards in Predefined Areas (APA) Rounds which cover mature areas and separate frontier area licence rounds. Many other licensing regimes have managed acreage release systems.
12) When with the 29th licensing round close? When will the licences be awarded?
Assuming that OESEA3 is finalised by June 2016, the 29th Round is expected to close in Q4 2016 with awards being made in Q1 2017.
