Licence relinquishments

Licence relinquishments

Man signing paperwork

There are two ways in which a licensee can give up acreage:

  • 'surrender' part of the licensed area while the licence continues over the remaining area
  • 'determine' the entire licence

The licensee can do either one at any time, subject to a few conditions.

To surrender acreage or determine a licence, complete a licence determination form for each licence and email them to licence.relinquishments@decc.gsi.gov.uk

 

Restrictions

There are two restrictions to the licensee's right to surrender or determine:

  • 'Non-standard' surrenders – irregular shapes defined by very short lines, or surrenders that leave a very small licensed area. The exact definition is in the clause titled 'Areas surrendered' within each licence (see the 2004 Model Clauses Regulations for example). Non-standard determinations require DECC assent.
  • A licensee may not make a surrender or determination if it would prevent fulfilment of a licence obligation, e.g. where a licence carries a work programme with a Firm Well Commitment, the licensee cannot determine the licence without drilling the well (or surrender acreage if it includes a location specified in the commitment as the place where the well is to be drilled). 

Notice periods

DECC requires recent Seaward Production Licences (P1155 and later) to provide one month's notice before determination/surrender. Be sure to submit the form in good time and specify an effective date at least a month in advance.

Older Seaward Production Licences specify six months' notice. DECC will often accept just one month's notice but we reserve the right to insist on the full six months – especially where there is a need to plug and seal wells. Note: this may affect the licensee's liability for rentals at the next licence anniversary, therefore DECC strongly recommends licensees ensure there are no producing or suspended wells on any acreage before they seek to surrender/relinquish it.

Company loss of licence involvement

Even though a surrender may occasionally leave a company without beneficial interest under the licence, the surrender does not remove that company from the licence. It will remain a party to the licence unless and until it withdraws by assigning its rights to the remaining companies. An assignment is often made effective on the same date as the surrender, but it does not need to be. Note: all assignments require the Secretary of State's permission; enter the name of the departing company at Q9 on the form to apply.


Relinquishment reports

DECC requires a relinquishment report at the time of determination for all Seaward licences from P1064 upwards. This requirement is conferred by the Model Clauses and invoked by a paragraph within the covering letter that accompanied each new licence issued in the 21st and later rounds. PILOT and DECC also agreed the requirement of a relinquishment reports with submissions from older licences for a full licence relinquishment or relinquishment of non-contiguous blocks in multiblock licences. 

The reports must comply with the guidelines (below) and be submitted within three months of the request.

Address all queries about relinquishment reports to: 


Data retention obligations and the NHDA

DECC takes seriously the obligation, borne jointly and severally by all licensees in the licence group at the time of determination, to hold licence data in perpetuity. DECC will scrutinise long-term data management strategies at licence determination and reminds licensees the only way of gaining relief from this obligation is to place licence data in the National Hydrocarbons Data Archive (NHDA) – DECC's preferred option for storage. Visit the NHDA website for more information or contact: 

Phil Harrison (DECC) – phil.harrison@decc.gsi.gov.uk
Colin Graham (BGS) – ccg@bgs.ac.uk 

 

Completing the form

DECC will assume the form has been submitted in accordance with the wishes of the entire licence group under the terms of the joint operating agreement (JOA) or similar agreement. DECC cannot accept responsibility for ensuring compliance with the terms of a JOA, but would like to know when a dissenting party has been outvoted (see Q8). Please email applications where possible, but postal appllications can be sent to: 

Licensing Exploration and Developments (licence determinations)
Department of Energy and Climate Change
3 Whitehall Place
London
SW1A 2AW

Part 1: contact details

Include details of the person we should approach for further information, and to whom we should reply. Enter a return postal address at box 4 if you want a written response. 

Part 2: nature of determination/surrender

  • Enter the subject licence and the block(s). Also attach (or enclose) a map showing the acreage before the determination/surrender, indicating the position and status of any approved fields and wells within the licensed area.
  • For a surrender, indicate clearly which acreage is to be retained and which surrendered.
  • At Q6 indicate if you are determining the full licence. If you are, you can skip part 3.

Part 3: area to be surrendered

Do not complete this part if you are determining a full licence.

  • Enter the grid coordinates that define the area to be surrendered (not the area to be retained). Use the suitable systems to define the coordinates: ED50 datum for offshore licences; National Grid datum for onshore licences. Show the location of all wells and fields within the currently licensed area. 
  • Specify any sub-area that lies wholly within the area to be surrendered, which will disappear as a result of the surrender.
  • Name any company left without beneficial interest in the licence that will seek the Secretary of State approval for an assignment to withdraw. 

Part 4: questions

  • Name here any party to the licence that objects to the determination/surrender – even if it is not able to block it.
  • Note any incomplete element of the initial term work programme (initial term licences only). 
  • List each well on acreage that will become unlicensed, including details of its status (producing, suspended, abandoned, etc.).
  • Specify any fallow acreage to be surrendered/determined.
  • Enter the effective date of the surrender/determination, bearing in mind the strictures on notice periods (above).
  • Add all other details you think we might need to know. 

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