LONDON (Alliance News) - The Oil and Gas Authority Monday announced the results of the 28th offshore licensing round which has led to a number of listed companies being awarded new licences offshore the UK.
The licensing round, which tends to be held once every couple of years, is the method used by the Department for Energy and Climate Change, via the new regulator, the Oil and Gas Authority, to assign licences to interested companies to allow them to explore or develop those specific areas.
This results of the offshore licensing round comes ahead of the first tranche of the 14th landward licensing round, which will focus on onshore licences with the results expected sometime in August.
Two listed companies have already released statements concerning the licences they have been awarded in the offshore licensing round.
Hurricane Energy PLC has been awarded blocks 204/30b and 205/26b offshore the Shetland Islands, which link up to two of its nearby existing licenses whilst Europa Oil and Gas (Holdings) PLC were awarded block 41/24 in the southern North Sea.
Both those licenses have been awarded as promote licenses on a "drill or drop" basis, meaning the companies will have to relinquish the licences if they do not complete a certain amount of work within a specific time period, which is usually for one or two years. A promote licence is designed to allow smaller companies and projects to obtain a production licence in order to attract the neccessary funding needed to operate or develop the licence.
There are three other FTSE 100-listed companies and one AIM-listed company that have also been awarded licences, but are yet to make statements concerning the blocks awarded or their plans for them.
FTSE 100-listed BP PLC has been awarded five licences. It has been awarded blocks 204/23a, 2014/24b and 204/25c, which it applied for on its own and also part of the 47/9d block and the 47/14 e block, both of which have been awarded to BP and its partners, Perenco and fellow FTSE 100 constituent Centrica PLC.
Centrica has also applied and been awarded block 49/3, 49/4d and 49/9d and secured block 43/19b, 42/10b, 43/20c and 44/18c with partners.
Royal Dutch Shell PLC was awarded 10 blocks in the licensing round, all of which it applied itself with no partners.
Importantly, all of the blocks awarded to Centrica, BP and Shell are traditional licences, which last for 26 years and allow for further development than a promote licence, but are also on a drill or drop basis which means certain amounts of work will still have to be completed. A traditional license is only awarded once a company has proven its technical and financial ability to operate or develop the licence, making it more relevant to larger companies.
Ithaca Energy PLC has been awarded block 15/19e through its partner, Idemitsu. That is also a traditional licence on a drill or drop basis.
Although some of these licences have been awarded to companies who applied for them by themselves, other partners may come into play in the future.
Other companies to be either directly awarded licences or through a partner include Statoil, E.ON E&P, ENI, Gdf Suez, Maersk, Total, Parkmead, Strike Oil and Suncor Energy, amongst others.
One other company that has been awarded six licences is Third Energy, which is a company also interested in onshore licenses and the potential for fracking in the UK. Third Energy is currently racing Cuadrilla Resources to be the first company to frack a well in the UK since 2011 through its application in Yorkshire.
The UK government is set to announce the results of the first tranche of the 14th licensing round for onshore oil and gas licenses in the country in August, raising the fears of anti-fracking campaigners that the new Conservative majority government will open the door for companies to exploit the country's shale reserves.
The 14th landward licensing round opened in July 2014 and the results will be in two tranches, the first of which will be announced in August and the second tranche "later in the year".
The first tranche will be for those licence blocks that have been screened out as not requiring further environmental assessment under the Conservation of Habitats and Species Regulations 2010. A consultation for the second tranche will be held in August.
Since the Conservatives won the General Election in May with an outright majority, the government has made it clear that it is in support of fracking. Most notably, it has said that fracking would be allowed to happen underneath those areas of interest as long as the wells are not drilled on the surface.
That means companies could drill into the ground on the borders of National Parks for example, before drilling vertically underneath to extract gas.
The licensing round is significant, mainly due to the sheer size and number of blocks on offer, with hundreds available that stretch between the south coast of England, including the whole of the Isle of Man, to as north as Scotland.
To put the amount of blocks into perspective, the Express newspaper cited eco-charity Friends of the Earth on Sunday claiming that up to 43% of Britain's land mass is covered by the blocks on offer under the licensing round, and according to The Guardian around 40% of the blocks on offer cover protected areas.
The companies that have applied for onshore licenses under the licensing round have not been released, but a series of listed companies may have potentially applied for licenses as they either already have licenses in the UK or have shown an interest in fracking in the past.
AIM-listed company IGas Energy PLC is currently working on a five-year plan to develop shale gas sites in the North West and East Midlands, just south of Cuadrilla's sites, alongside major international partners Total, GDF Suez and INEOS.
Frack Off, a grassroots direct action campaign aimed at stopping the extraction of unconventional resources in the UK, lists a number of listed companies as interested or engaged in fracking within the UK. Whether or not they intend to apply for licenses to frack or not, these companies are the most likely to be active in the licensing round.
They include Dart Energy, which is a subsidiary of IGas, Infrastrata PLC, Egdon Resources PLC, Enegi Oil PLC, Alkane Energy PLC and Celtique Energy which is not listed but works with numerous companies including Egdon, Europa Oil and Gas (Holdings) PLC and Union Jack Oil PLC on the Wressle-1 discovery.
Also, there has been previous mentions in the media that the companies involved in the much-highlighted Horse Hill discovery near Gatwick airport may consider fracking the site. Those companies involved comprise UK Oil and Gas Investments PLC, Doriemus PLC, Stellar Resources PLC, Solo Oil PLC, Alba Mineral Resources PLC and Evocutis PLC.
Cluff Natural Resources PLC and Europa also are listed by Frack Off as companies interested in underground coal gasification, which extracts gas from old coal deposits using a similar technique to fracking.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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