UK Continental Shelf Just Did Something It Hasn’t In 20 Years

UK continental shelf

Another big week for offshore oil and gas. With the most intriguing news being: Japan’s INPEX hitting a “high-pressure gas column” in a scientific test well off the coast of southwestern Japan.

That could drastically change thinking around petroleum potential in the Sea of Japan/East China Sea. And another big offshore development this week could lead to similar paradigm shifts — in a place many observers think is tapped out for potential.

That’s the UK continental shelf. Where the government this week announced very successful bidding results from a highly unusual licensing round.

The U.K. closed bidding for its first “frontier licensing round” in over two decades. With the oil and gas blocks offered consisting mainly of more-conceptual plays in under-explored areas of the shelf — such as the East Shetland Platform, the Rockall Trough, and the Mid-North Sea High.

As the map below shows, the blocks put out in this round (shown in pink) are a significant departure from already leased blocks (yellow). Showing just how far the U.K. government is pushing into new petro-territory.

UK Continental Shelf

Blocks offered in the new U.K. frontier round (pink) are significantly outside traditional core operating areas (yellow)

So how did industry respond to this unusual offering? They jumped all over it.

The government said Monday that the frontier round attracted bids from a full 24 companies. With those firms placing bids on 113 blocks — representing a significant portion of the areas on offer.

That shows E&Ps are seeing something they like here. And that high level of interest could be setting the stage for some major frontier discoveries in this mature basin — especially given this is the first bid round conducted since the U.K. government funded a major seismic program covering several new areas.

That work involved reprocessing over 20,000 kilometers of legacy seismic — and collecting 13,500 kilometers of new data. Some of which was made available to bidders before this round, with the remainder to be shared with industry in mid-2017.

That work could mean explorers are seeing new prospects here for the first time. Watch for announcements on the identities of the ultimate successful bidders, and for details on which particular areas they’re targeting.

Here’s to frontier spirit,

Dave Forest

Article by Pierce Points

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About the Author

PiercePoints
Dave Forest writes Pierce Points Free Daily E-Letter, an advisory on mining and energy read every day by BP, Rio Tinto, JPMorgan, BNP Paribas, Repsol, GDF Suez, GE, Platts, Warburg Pincus, and the UN. Sign up for free at www.piercepoints.com. Mr. Forest has funded and managed over $80 million in global exploration and development in natural resources, and continues to design and develop projects globally. He is a professional geologist.

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