The North Sea “is back” after a “transformational” licensing round in which more than 60 companies secured rights to explore for oil and gas in one of the world’s most mature basins, the UK industry regulator said on Wednesday.
“The UK continental shelf is back,” said Andy Samuel, chief executive of the Oil and Gas Authority. “Big questions facing the basin have been answered in this round. Exploration is very much alive, with lots of prospects generated and new wells to be drilled.”
The North Sea was hit hard by the oil price crash that began in mid-2014 because it has been one of the most expensive places in the world from which to extract oil and gas. But the basin is rebounding as prices have recovered.
The 30th offshore licensing round focused mainly on previously explored or “mature” areas of the North Sea.
The number of licences awarded was marginally fewer than in the last round to focus on mature areas, in 2016, but the Oil and Gas Authority described it as “transformational” because companies have made firm commitments to drill eight exploration or appraisal wells and carry out nine new 3D seismic surveys.
Fourteen of the licences will be advanced immediately to the field development planning stage.
The Oil and Gas Authority said it hoped the licensing round would unlock 320m barrels of oil equivalent in about a dozen previously “stranded” or undeveloped discoveries.
Although development activity in the North Sea has rebounded and several companies have committed significant capital expenditure to the basin following the price crash of 2014, exploration drilling has slumped until now.
“There is a real sign of confidence,” said Mr Samuel. The results of the licensing round had demonstrated that exploration was not dead in the North Sea, he added.
Kevin Swann of Wood Mackenzie, the consultancy, said: “The UK is in desperate need of new projects to fill a development pipeline that is all but empty beyond the early 2020s, and 14 new pre-[final investment decision] projects could go a long way to rectifying that.
“The eight firm exploration wells among the awards, with big companies like Shell, BP, Equinor and ConocoPhillips among those set to drill, is a big vote of confidence in the UK.”