UK: 27 new onshore blocks to be awarded to shale drillers

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The Oil & Gas Authority (OGA) – the UK’s oil and gas regulator – announced yesterday that 27 onshore blocks from the 14th Onshore Oil and Gas Licensing Round will be formally offered to companies.

A second group of 132 further blocks – areas of land, typically 10km x 10km – has been subjected to detailed assessment under the Conservation of Habitats and Species Regulations 2010, the findings of which are now out for consultation.

Subject to the outcome of that consultation, the OGA will announce offers for the second group of licence blocks later in the year. The licences for all offered blocks will then be granted after the terms and conditions have been finalised.

As fracking is currently banned in Scotland and Wales, all of the awarded licences are in England – in the Midlands and the North East.

In a statement, the OGA explained that the Petroleum Exploration and Development Licence (PEDL), granted under the provisions of the Petroleum Act 1998, affords exclusive rights to licensees “to search and bore for and get petroleum” in all the various stages of oil and gas operations – exploration, appraisal, production and abandonment of wells.

The PEDL itself does not confer on the licensee any consent, approval or permission to carry out specified development activities – all activities, such as drilling, will necessarily require further consents, including planning permission and environmental permits.

The issuing of these permits is still in the hands of the local councils but as of last week, ministers have the power to intervene if local authorities are deemed to be holding up shale gas applications.

OGA Chief Executive Andy Samuel said: “With almost 100 applications received, the 14th Onshore Round has attracted significant interest and high-quality proposed work programmes from a range of oil and gas companies. Today’s announcement regarding the offer of 27 blocks gives those successful companies assurance about the blocks that they will be formally offered later in the year.”

UK Energy Minister Lord Bourne said: “As part of our long-term plan to build a more resilient economy, create jobs and deliver secure energy supplies, we continue to back our onshore oil and gas industry and the safe development of shale gas in the UK. This is why the OGA has moved quickly to confirm the winners of licence blocks which do not need further environmental assessment.

“Keeping the lights on and powering the economy is not negotiable, and these industries will play a key part in providing secure and reliable energy to UK homes and businesses for decades to come.

“It’s important we press on and get shale moving, while maintaining strong environmental controls. Investment in shale could reach £33 billion and support 64,000 jobs creating financial security for hardworking people and their families, whilst providing a cost-efficient bridge to lower-carbon energy use.”

The blocks have been offered to the following operators:

  • Island Gas Ltd (7 blocks);
  • Cirque Energy (UK) Ltd (4 blocks);
  • Ineos Upstream Ltd (3 blocks);
  • ADM (2 blocks);
  • Cuadrilla Resources Ltd (2 blocks);
  • Egdon Resources UK Ltd (2 blocks)
  • Hutton Energy PLC (2 blocks);
  • Aurora Energy Resources Ltd (1 block);
  • Blackland Park Exploration Ltd (1 block);
  • GDF Suez E&P UK Ltd (1 block);
  • Osprey Petroleum Ltd (1 block); and
  • Warwick Energy Exploration Ltd (1 block)

UK shale gas pioneer Cuadrilla Resources – currently appealing the decision of the Lancashire County Council stopping them from drilling in two areas in the county – was awarded two new licenses; about 750 square miles of combined land, to explore the reserve potential in Yorkshire.

“While we continue to progress our shale gas exploration work in Lancashire, we welcome the potential for exploration in Yorkshire along with the associated benefits of new jobs and economic growth we believe it will bring,” Cuadrilla Chief Executive Officer Francis Egan said in a statement.

The OGA explained in a statement that the Habitats consultation, which covers those blocks which do require further environmental assessment, will be closed at the end of September. The OGA will then consider the results of the consultation before offering any further blocks.

The 14th Onshore Oil and Gas Licensing Round was launched on 28 July 2014 and closed on 28 October 2014. A total of 95 applications were received from 47 companies covering 295 Ordnance Survey Blocks.

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