| Understanding geology and geophysics is key to the
successful exploration and development of UK oil and gas resources.
The Government is determined that the UK continues to have a strong
economy - one which fosters innovation and productivity.
Energy underpins our social and economic success - and oil and gas
continue to play a vital part in supplying the nation's energy needs. We
have a very productive oil and gas industry - with annual capital
expenditure of £3.5 billion and supporting 260,000 jobs.
New challenges continue to emerge as the North Sea matures.
The Government's key role is setting the framework to attract
investment and activity.
We have already taken steps to improve the climate for investment -
including streamlining North Sea regulatory procedures, a more responsive
tax regime to encourage new entrants and our work with industry to improve
the commercial climate and access to infrastructure.
This Conference shows potential investors what the North Sea still has
to offer.
Building on the success of last year – it is rapidly becoming a firm
fixture on the oil and gas calendar.
This enhanced communication between prospectors and investors should
lead to more North Sea exploration, drilling and development.
Working closely with industry Government aims to maintain North Sea. A
range of initiatives are being pursued through PILOT, the
Government/industry forum, including:
Enhancing the licensing system & commercial climate
Attracting new players
Freeing up fallow acreage and
Finding ways to increase recovery from existing "brown" fields.
These initiatives are making a contribution to ensuring we wring every
last drop of economic oil from the North Sea.
However, rather than going into detail on all of these, I'd like to
focus on three areas I believe are currently the most relevant to you: Our
recent enhancements to the licensing system progress with the fallow
initiative and improving availability of technical data.
My Department's recent efforts to enhance the licensing system aim to
attract new investment.
They seek to create an environment which provides opportunities for a
wider range of companies - not just established oil and gas players.
That is why last year we introduced the "promote" licence - at a tenth
of the cost of a traditional licence.
It encourages new prospectors to acquire acreage work-up prospects and
attract investors.
I am delighted the promote licence played a full part in ensuring
success in last year's 21st Offshore Round.
At that time we issued 89 licences, including 54 were promote licences.
Twenty-five new players joined the North Sea through this new route. A
number of you have been analysing areas awarded to you.
We are now starting to see some companies moving onto the next stage of
the process.
So, for example, Challenger Minerals Palace and Walter Oil and Gas have
drilled on two promote licensed blocks and funded new seismic on others.
We have built further on our success. This year's 22nd Round offered 97
licences covering 163 blocks - the largest number of licences issued in
over a decade!
It included fifty-eight promote licences - and we saw fifteen new
companies starting work here, including Endeavour Century and Ithaca.
We also issued licences covering 44 blocks West of Shetland including
27 blocks via the new “frontier” licence. Frontier licences are designed
to reduce risks for geoscientists to investigate “new play concepts” - a
valuable innovation in a basin which is still under-explored.
I am delighted that ChevronTexaco, who were awarded 29 blocks - all
West of Shetland - in the 22nd Round, have had recent drilling success in
this region with the ”Rosebank" and "Lochnagar” prospects.
This significant discovery will boost confidence further in the region.
Looking longer term we are keen to incorporate the "promote" element
permanently into our annual offshore rounds. And I intend to announce the
23rd Round early next year.
Government and industry have also been active on the fallow initiative.
As the North Sea matures, there is an increasing need to make use of
existing infrastructure. This is vital to ensuring that all possible
prospects are developed.
It follows that those holding acreage should also be actively pursuing
opportunities.
The fallow initiative is all about getting acreage into hands of those
best placed to exploit it. We are working very hard and seeing success.
Over 560 blocks and over 230 discoveries have been identified as
fallow.
This has already led to activity on 135 fallow blocks and 41
discoveries, with 36 wells drilled and 12 development plans coming
forward.
In addition 111 blocks have been relinquished, of which we have already
re-licensed 16 in recent rounds.
We intend to make all relinquished blocks available for future rounds.
However we cannot be complacent.
As I said last month at PETEX I have asked my officials to work with
industry to tighten up the process further.
A workgroup has already been set up. Areas to be explored include
possibly shortening time-frames and seeing if there are other ways of
moving fallow discoveries forward which have no activity plans at the end
of the current two year fallow period. In parallel, we will continue with
the process. We will be announcing the release of over 100 fallow assets
in the new year.
Industry needs good quality data to make informed investment decisions
and reduce risk.
Through the PILOT data workgroup, Government and industry have enhanced
availability and quality of geological and geophysical data during the
last year.
We must aim to find and develop new UK offshore reserves.
They will only be found through drilling more exploration and appraisal
wells. And they will only be drilled if new ideas are supported by good
quality data. Our initiatives are making data more available.
The DEAL Data Registry publishes via the web a comprehensive catalogue
of released UK Continental Shelf well and seismic survey data.
There is a National Hydrocarbons Data Archive to preserve valuable UKCS
geo-science data and make it available at low cost. There are now shorter
periods before release of data.
And we are about to review current guidelines for seismic data release
to see if availability can be improved further. There are still many North
Sea opportunities.
Today DTI releases the latest version of it's "Promote UK" CD-Rom.
This provides information about the regulatory regime, the licensing
process. It also includes new prospects - which we hope to offer in next
round.
It's worth remembering OilExco's activity on Brenda stems directly from
information given in a previous version of the CD.
And it is worth remembering that 15 of the assets identified in last
year's CD were licensed through the 22nd Round.
Copies of the latest version are available free from the DTI stand.
I'll leave you with a few final thoughts. Government is doing all it
can to stimulate new activity and investment. Industry is also playing a
key role. Plenty of opportunities remain but we need to act now.
I hope this event allows prospectors to attract the investment needed
to turn sound ideas into exploration and development plans.
And that potential investors are encouraged to look more closely at
what the North Sea has to offer. This should of course then result in what
we are all looking to see - increased drilling and production and a
healthy future for the North Sea and its investors.
There aren't many conferences where opportunities to make deals are
available just outside the auditorium. Do get out there and make the most
of this.
However I see there are some very good talks lined up too - so make
good use of your time!
|
