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UK Looks To Jump Start Offshore Activity With This Bidding Round

Offshore units

Another big week for offshore oil and gas. With the most intriguing news being: Japan’s INPEX hitting a “high-pressure gas column” in a scientific test well off the coast of southwestern Japan.

That could drastically change thinking around petroleum potential in the Sea of Japan/East China Sea. And another big offshore development this week could lead to similar paradigm shifts — in a place many observers think is tapped out for potential.

That’s the U.K. continental shelf. Where the government this week announced very successful bidding results from a highly unusual licensing round.

The U.K. closed bidding for its first “frontier licensing round” in over two decades. With the oil and gas blocks offered consisting mainly of more-conceptual plays in under-explored areas of the shelf — such as the East Shetland Platform, the Rockall Trough, and the Mid-North Sea High.

As the map below shows, the blocks put out in this round (shown in pink) are a significant departure from already leased blocks (yellow). Showing just how far the U.K. government is pushing into new petro-territory.

(Click to enlarge)

Blocks offered in the new U.K. frontier round (pink) are significantly outside traditional core operating areas (yellow)

So how did industry respond to this unusual offering? They jumped all over it.

Related: 105 Oil & Gas Bankruptcies: But Production Isn’t Shrinking

The government said Monday that the frontier round attracted bids from a full 24 companies. With those firms placing bids on 113 blocks — representing a significant portion of the areas on offer.

That shows E&Ps are seeing something they like here. And that high level of interest could be setting the stage for some major frontier discoveries in this mature basin — especially given this is the first bid round conducted since the U.K. government funded a major seismic program covering several new areas.

That work involved reprocessing over 20,000 kilometers of legacy seismic — and collecting 13,500 kilometers of new data. Some of which was made available to bidders before this round, with the remainder to be shared with industry in mid-2017.

That work could mean explorers are seeing new prospects here for the first time. Watch for announcements on the identities of the ultimate successful bidders, and for details on which particular areas they’re targeting.

Here’s to frontier spirit.

By Dave Forest

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