Hopes are high that the government’s latest round of licences will act as a catalyst for the North Sea’s valuable oil and gas sector.
The Department for Energy and Climate Change (Decc) announced that bidding was open for a further 2,728 blocks in the 28th offshore oil and gas licensing round.
Licence fields include more mature regions of the north, central and southern North Sea but also offer new territory in lesser explored areas in the Irish Sea near Morecambe Bay, the southern end of the UK in the English Channel and areas west of the Hebrides.
Oonagh Werngren, operations director for the offshore industry trade body, Oil & Gas UK, said it was hoped the licensing round could help avert an “exploration crisis”.
Earlier this month, Oil & Gas UK warned that the North Sea faced a decline due to a fall-off in exploration after only 15 wells were drilled in 2013 and less than 100million barrels of oil discovered in the last two years – despite last year reaching near record levels of investment.
Ms Werngren said: “We are in a mature basin. We are seeing a lot of rising costs. We’ve got aging infrastructure. We have to keep renewal of the basin going.
“By announcing the 28th round, we are addressing that issue.
“There will be new acreage and new entrants. But for new players to be attracted, it requires a stable tax regime.”
Prime Minister David Cameron hinted earlier this week that the next Budget could include tax breaks to boost exploration work and safeguard many of the 350,000 jobs which the UK oil and gas sector supports.
Uisdean Vass, a partner with law firm Bond Dickinson, said it would take time for the latest round to deliver results.
“Licensing rounds have been hugely successful in the UK but they don’t necessarily come with big exploration commitments. For many, the obligation will be to acquire seismic for the first two years.”
Decc issued a record number of licences in November last year, with 219 offers being made – including 21 newcomers to the sector.
“There continues to be extremely high level of interest in North Sea oil and gas, which is unsurprising when there could be as many as 20billion barrels of oil still buried deep within the seabed,” said Energy Minister Michael Fallon.
Firms will have until April 25 to submit applications for new North Sea licences.