Offshore Oil and Gas Licensing (Hansard, 21 November 1995)

§ Mr. Page

I have decided to offer 275 blocks for licensing in 68 tranches or groups in the 17th offshore licensing round. We are entering real frontier territory with some of the tranches nearly as far west as Rockall. It is a reflection of the potential of the UK continental shelf that after 30 years of exploration, there are still exciting new areas to search.

Tranches vary from two to 13 blocks, depending on perceived prospectivity, location and water depth, and are chosen so that companies can consider all of the different areas available. I am offering blocks in groups because relatively little is known about the areas being offered.

Most of the tranches offered—41—are in the Rockall trough, located east of Rockall and to the south-west of the recent discoveries in the west of Shetland area. The trough is an area where little exploration has taken place but which has considerable potential for significant discoveries.

Tranches are also offered to the south-west of England, to the north of Scotland and of the east coast of England. Some are in areas that have not been explored before or were once considered unprospective. The fact that these blocks are not of interest to the industry shows how new technology and ideas can challenge long-established perceptions.

Since the areas offered are comparatively unknown, companies will have a year in which to prepare their applications. This gives them an opportunity to acquire seismic data during the "weather window" next summer and to process and analyse it before committing themselves. Instead of the usual six years, successful applicants for these tranches will have nine years in which to carry out their agreed work programmes. At this stage, I am asking companies to commit to a programme for the first three years only because of the uncertainties of exploring such new areas.

Companies will be expected to show commitment to the future of the UK continental shelf by coming forward with new ideas, and keeping up the momentum for increasing competitiveness and cutting costs. The objective of the 17th round is to encourage exploration in new areas and so to continue the development of our oil and gas resources into the next century.

Applicants must show awareness of available information on environmental resources in the area for which they are applying. They must assess the potential impact of their proposed work programmes on the environment and identify how any adverse effects can be avoided or minimised.

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Conditions to be attached to licences in this round to safeguard the environment have been agreed with the Joint Nature Conservation Committee. Restrictions also cover the interests of other users of the sea such as fishing, defence and transport.

We have conducted a wide-ranging consultation exercise on the 691 blocks which were nominated by the industry in march, involving other Government Departments, local authorities and environmental groups. In all a total of over 70 organisations have provided advice.

The 17th round completes the three-round licensing cycle announced by my right hon. Friend the Minister for Industry and Energy in April 1994. The 15th round awarded blocks in established areas in the central North sea and southern gas basin. The 16th round awards, which I announced during the summer, covered areas to the west of Shetland and around the coast of Britain.

Applications for the 17th round are required by noon on Wednesday 27 November 1996. Licence awards should be announced during the spring of 1997.

I will now publish in the Official Journal of the European Communities a formal announcement giving the detailed terms for the 17th round, including the format of applications, the information required with the application and the basis on which awards will be made.