Www.og.dti.gov.uk OG-LED AND THE UK ONSHORE OIL AND GAS INDUSTRY GEOFF SWANN SENIOR GEOLOGIST DEPARTMENT OF TRADE AND INDUSTRY.

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OG-LED AND THE UK ONSHORE OIL AND GAS INDUSTRY

GEOFF SWANN

SENIOR GEOLOGIST

DEPARTMENT OF TRADE AND INDUSTRY

www.og.dti.gov.uk

Purpose of the talk

• Explain role of OG-LED

• Highlight selected issues• Demonstrate that there is a future for the onshore oil and gas industry

Regulation

Promotion

(Oil and Gas - Licensing, Exploration and Development)

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• The new OG-LED organisation and its objectives

• The licensing system

• Web services and data release

• Environmental issues

• Coalbed methane and mines gas

Agenda

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Where does OG-LED fit in DTI?

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DTI

Ann Eggington

Markets and Policy

Jim Campbell

Environment & Decommissioning

Ian Todd

Industry Support

Stewart Robinson

IT

Stephen Byers

Secretary of State for Trade and Industry

Peter Hain

Minister for Energy & Competetiveness in Europe

Sir Michael Scholar KCB

Permanent Secretary

Anna Walker

Director General Energy

Geoff Dart

Director Oil and Gas (OG)

Simon Toole

Director OG-LED

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OG-LED

Exploration Team

Northern Area Field

Team(Aberdeen)

Peter HailePromotion Team

Knowledge Team(data)

& Onshore

Exploration & Development

Central Area Field Team

Southern Area Field

Team

Merged exploration and development into a single team

Simon Toole

Director OG-LED

Mike HawkinsLicence

administration

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OG’s objective is to

To maximise the economic benefit to the UK of its hydrocarbon resources, taking into account the environmental impact of hydrocarbon development, and the need to ensure secure, diverse and sustainable supplies of energy for business and consumers at competetive prices.

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Objectives for 2010 (OGITF Targets)

• Production at 3 million barrels of oil equivalent per day

• Investment in UKCS activity sustained at £3 billion per annum

• Commitment to prolonged self sufficiency in oil & gas

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UK onshore fields produce c 31 mmboe pa but some 25 mmboe is from Wytch Farm *

(* 2001 “Brown Book” operator’s estimate of peak production. Does not include fields in Mining Licences)

How does the onshore fit in?

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Benefits of the UK onshore industry

• Employment

• Regeneration - especially in coalfield areas

• Local power/gas supply

• Technology export and spin-offs

• Environment

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The Licensing System

• Current status

• Future plans

• Out-of-Round licence awards

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Onshore licensed

areas

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ML 7 188 km2

Current onshore licences:

AL 4 205 km2

DL 5 42 km2

PL 28 1733 km2

EXL 37 6342 km2

PEDL 97 24483 km2

TOTAL 178 32992 km2

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2

4

6

8

10

12

14

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

EXPLORATION WELLS CBM/GOB GAS WELLS DISCOVERIES

Wells and discoveries 1990 - 2000

BeckeringPickering

Saltfleetby

Airth

Fiskerton Airfield

Cold Hanworth

Keddington

Newton on Trent

Reepham Cowden

Lingfield

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• Healthy licensing position - we want to keep it that way

• Range of new developments from mines gas to Saltfleetby

• Successful 9th Round - 43 licences issued

• Continued interest for both conventional hydrocarbons and cbm/mines gas

• Need more drilling activity

• Encourage new entrants

• Looking for operators to explore new potential

Summary

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• OG-LED intends to hold a 10th Round in late summer/autumn (depends on 20th offshore Round timing)

• Discourage acreage banking

• Review to ensure licensed acreage is being explored

• No waivers on firm wells

• Drill or drop options will be enforced

• No extensions to PEDL initial terms

• PEDL “2nd” terms - need development plan approved before 3rd term commences (no extensions)

• Consider changes to model clauses / regulations

• Want to remain flexible - what does industry want?

Future plans

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Out-of-round awards

• Only made in exceptional circumstances

• Generally require 90 day OJ notice• Can be restricted to adjacent licensees• Not a back-door route to acreage

To facilitate development

Operational reasons

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Web services

• DTI would encourage an onshore website

• DEAL - data market place

• Web based licence assignment system - by end 2001

• Onshore well and licence data on DTI’s website

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Data Release• UKOGL - a continuing success. Library

will continue to be supported by DTI. Is there scope for similar initiatives?

• Can we publish licence applications and/or reports?

• Need agreement from old and existing licensees

• What formats would we use (cost)?

• Available for inspection (and copying)?

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Environmental issues• Legislation administered by DETR, EA/SEPA and local

authorities

• OG-LED has an advisory role

• Landfill Directive - reinjection of third party liquid waste will be prohibited

• Foot and mouth - follow MAFF/local authority guidelines

PEDL does not give right of access

OG-LED will be flexible over drilling and seismic commitments

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Coalbed Methane & Mines Gas

• Petroleum Exploration and Development Licence vs Methane Drainage Licence

• MDL - for mine safety purposes only: DTI will not compromise safe working practices

• MDL does not give right to drill for gas but PEDL holder can not drill over or near a mine

• PEDL and MDL holders should reach agreement without DTI intervention

• DTI will not tolerate “back door” developments

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Want to know more?

Geoff Swann

020 7215 5062

[email protected]

www.og.dti.gov.uk