Regulation

Updated: Government agrees 2 more exploration licence changes

UK Oil and Gas

The government has agreed to two more changes to the terms covering oil exploration licences in Surrey and West Sussex, according to UK Oil & Gas Investments, the company behind the Horse Hill oil well near Gatwick.

UK Oil and Gas Investments Ltd (UKOG) announced today (27/6/2016) that the initial exploration term for PEDL 143 in Surrey had been extended for two years until 30 September 2018. This is confirmed by details for the licence on the Department of Energy and Climate Change webpage.

UKOG has a 30% interest in PEDL 143, which is operated by Europa Oil and Gas Holdings. The licence includes the site of the proposed Holmwood-1 well site on the edge of Dorking. It is immediately west of PEDL 137, where UKOG has a stake in the Horse Hill well.

The following day (28/6/2016),  UKOG announced that it and IGas had received an extension of the licence for PEDL 233, which includes the Baxters Copse oil exploration site in West Sussex, until 30 June 2018. This will allow time to drill another appraisal well at Baxters Copse, the company said.

On the PEDL 143 extension, Stephen Sanderson, executive chairman of UKOG, said:

“The forthcoming Holmwood-1 well is a key part of the Company’s near term strategy to push the Kimmeridge Limestone play forwards. The extension is very welcome.”

This is the latest in a number of variations approved or being considered by the Oil and Gas Authority, the organisation responsible for Petroleum Exploration and Development Licences (PEDLs).

Lancashire

Last week, Cuadrilla announced that the OGA had agreed to a change in the rules on its PEDL 165 in the Fylde area of Lancashire. This has allowed it to keep about 94% of the area after the initial term expires this week.

Campaigners from Frack Free Lancashire said the Department of Energy and Climate Change had told them Cuadrilla would need to surrender 50% of the area to progress to a second term. DrillOrDrop report

West Sussex

In West Sussex, UKOG has offered £3.5m for PEDL 165 on condition that the initial term, also expiring this week, is extended for at least a year. Today, local campaign groups wrote to DECC and the OGA objecting to any extension of the licence. DrillOrDrop report

Chester

DECC has confirmed that an application has been made to vary the licence of PEDL 189 in and around the city of Chester.

In a written answer to the Labour MP Chris Matheson, the Energy and Climate Change Minister, Andrea Leadsom, said: “The request is under consideration from the Oil and Gas Authority and a decision will be made shortly.” Link to question and answer

DrillOrDrop asked the OGA if a decision had been made but it has been unable to provide a reply so far. We will update this post when it does.

OGA comment on licence terms

The OGA did, however, reply today to an earlier set of questions by DrillOrDrop. In a statement it said:

“Several licensees proposed amendments to their Licences, either to extend the Initial or Second Term of their licences, or to adopt the latest Model Clauses (set out at Schedule 2 of the Petroleum Licensing (Exploration and Production) (Landward Areas) Regulations 2014 (see http://www.legislation.gov.uk/uksi/2014/1686/contents/made). Licensees adduced a range of grounds for their proposals.

“In those cases where OGA agreed the proposals, it has drafted and sent Deeds of Variation to the licensees for their signature. When the process is complete, OGA will place a list of the variations, and of the licences that will end on 30 June, on its website.

“The 2014 Model Clauses implemented certain changes from previous Model Clauses: principally that the retention of acreage is made subject to the agreement of Retention and Development Areas (clauses 16, 19 and 43), and there is a reduced confidentiality period for certain information about hydraulic fracturing (clause 32). While no Retention Areas or Development Areas have yet been agreed, Clause 5(3)(b) can modify the condition relating to a surrender of 50% of the initial Licensed Area where Retention Areas or Development Areas exist.”

Information request

Please contact DrillOrDrop if you know about variations in licence terms of other PEDLs

9 replies »

  1. disastrous government rule change…unending sword of damocles held over anti fracking campaigners..no time limit to plans to drill.

  2. It is quite normal to get licences extended offshore UK and all over the world. As long as a company is deemed to have made a reasonable effort to fulfil the licence obligations and there are valid reasons for delay (such as planning and protesters) then why not extend a licence? The other reason for possible extension or relinquishment requirements could be that no other companies are interested in that particular area. Plus the drop in oil price must impact economic viability of some projects although I expect Horse Hill area will still be economic.

    I have seen licences extended, work programs changed, even penalties paid to walk away for licences, all over the world.

    DECC and the OGA are doing their job – maximising the potential for the UK of exploitation of onshore hydrocarbons. Post last Thursday this is going to be even more important – and hopefully easier without Europe interfering (I voted to stay in but not for any O & G reasons).

  3. Gold standard regulations anyone?? Just hot air from a dead duck government, Does any other industry get this soft treatment? The fracking operators fail to perform within their contracted time scale, and what do the DECC do? Just change the regulations to allow an extension of two years! I think i will apply for an extension of two years to licence my car, and then when i fail to perform and ask for another extension, ad infinitum. Then i will apply for a licence to frack under Westminster and David Camerons constituancy.
    Ironic, moi?

  4. G’Day Michael,
    I apologise for the word ‘moi’ we are all British now, not French…. or rather EU citizens, arent we? At least until we implement Article 50 we are all one big happy family and get on so well together! Except for the Scottish of course, oh yes and Northern Ireland and maybe London as well and the age differential. Never mind, we will all end up one united country behind…oh my god, Boris Johnson? Nigel Faraj? Where is my passport? How much is the pound worth, really? Maybe i wont be going that far after all.

    Ooops, that may be considered to be a non-violent extremist point of view, subject to arrest without warrant and representation if i dont tow the line. Maybe i shall be due for some ‘re-education’ and then i shall be a happy fracker with no worries whatsoever.

    Aw hell, no i wont, sorry guys, i almost changed sides then! i guess i shall always be an awkard SOB and just keep plugging away till i’m blue in the face.

    Happy fracking everyone!

    Is that measured and respectful Michael? Have a wonderful day one and all.

    • Philip, extremely respectful, goodonya!

      I’m glad we crossed paths Philip, we have similar senses of humour.

      Stay safe and well.

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