ECONOMIC REPORT 2013
31
c) Licensing
Over the past 49 years, there have been
27 Licensing Rounds with the 28th Round
expected to be launched in January 2014.
DECC issued a total of 167 new licences
covering 330 UKCS blocks in the 27th Round
of October 2012. This was the largest number
in the history of offshore exploration in the
UK and it is anticipated that the increased
interest in Licensing Rounds will help stimulate
exploration activity in the years to come.
Seventy per cent of all E&Awells drilled in 2012
were in acreage that was awarded in Licensing
Rounds 22 to 26 (of 2004 to 2010), yet only four
per cent were in acreage awarded in Rounds
17 to 21 (of 1996 to 2003). This contrast could
be a direct result of the changes to licensing
terms in 2002, which increased pressure on
operators to fulfil certain drilling requirements
within a four year time-frame.
Around 17 per cent of wells drilled were in
acreage obtained in Rounds 1 to 4 (of 1964
to 1972), demonstrating that companies are
revisiting old and previously explored acreage
using improved seismic imaging and/or
prospects have become commercial because
of the proximity of surrounding infrastructure.
Constraints on access to finance for smaller
companies and a tight drilling rig market
have heightened uncertainty and pushed
companies to develop lower risk opportunities
that have a number of infrastructure options.
Only nine per cent of wells drilled in 2012
were in acreage awarded in Rounds 5 to 16
(of 1976-1995), raising the question of whether
or not the acreage awarded in those Rounds
has been fully exploited to date.
The Road to 2040
Since production peaked in the year 2000, the
offshoreoil andgas industry intheUKhasentered
a mature phase and its outlook has changed. In
Figure 24: Exploration and Appraisal Expenditure versus
Number of Wells Drilled
Figure 25: Drilling Activity in 2012 by Licensing Round
Source: Oil & Gas UK
Source: DECC, Oil & Gas UK
0
20
40
60
80
100
120
0
500
1,000
1,500
2,000
2,500
2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of E&A Wells Drilled Including Sidetracks
Total Expenditure (£ Million)
Seismic
Appraisal
Exploration
Number of Wells
(Right Hand Scale
)
Source:Oil&GasUK
