Transcript Fallow Blocks - Department of Energy and Climate Change

UKCS INITIATIVES TO ENCOURAGE
EXPLORATION
Jen Brzozowska
Head of Exploration
UKCS Initiatives to Encourage Exploration
Why did the UK
need to
encourage
Exploration?
How was it done?
Has it worked?
20th March 2007
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
20th March 2007
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
How was it done?
•
Initiatives
– Licensing
• Promote Licence
• Frontier Licence
– Fallow Process
– Promote UK & Relinquishment Report Publication
– Stewardship
20th March 2007
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
Licensing
– Traditional Licence:
• 1st to 4th Round
–
–
–
–
(1964 to 1972)
6 year Initial Term
40 year Second Term
Multi-Block Licences
If Field Development Plan approved anywhere on the remainder of
the Licence, it could be retained for the duration
• 5th to 10th Round
(1976 to 1987)
– Shorter Second Term (30 years) but still long
• 11th to 19th Round
(1988 to 2001)
– Three Terms (6 + 12 + 18); Relinquish all but Development after 18 years
• 20th and subsequent Rounds (2002 to date)
• Amended Terms
– 4 year Initial Term
– 4 year Second Term
– 8 year Third Term only retain Field Development area
20th March 2007
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UKCS Initiatives to Encourage Exploration
Licensing
– Promote Licence introduced for 21st Round 2003:
designed
to allow ideas to be worked exclusively, realising value by marketing (enables smaller
companies without major resources to pursue an interest in a prospect)
• Initial Term 4 years but split; two year evaluation and promote period;
two years to complete Work Programme if continued
• First two years 90% reduction on fees to £15 per sq km/year
• Successful Prospect Fairs held from December 2003 to December 2006 for
the Promote Licensees to show and potentially sell their ideas
– Frontier Licence introduced for 22nd Round 2004:
allows
application for larger amounts of acreage for scoping studies, initially in the area to the
west of the Shetland Islands, SEA 1 & 4 only
• 90% reduction on fees in a First Term of 2 years to screen acreage
• Relinquish 75% to enter Second Term of 4 years to carry out the
substantive Work Programme (drilling)
• Further relinquishment to enter a Third Term of 6 years
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NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
Summary of Recent Round Success
Licence Round Blocks on Offer Blocks Applied For Type of Application Licences Awarded Block Awards New Entrants
20th (2002)
Traditional
29 Traditional
25
289
36
36
6
SEA 2
Total
25
29 Total
40 Promote
53
Promote
21st (2003)
612
142
137
27
30 Traditional
35
Traditional
SEA 2 & 3
Total
70 Total
88
4
7
Frontier
Frontier
22nd (2004)
42 Promote
58
Promote
1039
164
163
15
30 Traditional
32
Traditional
SEA 1, 2, 3 & 4
Total
76 Total
97
7
6
Frontier
Frontier
23rd (2005)
60 Promote
76
Promote
1329
279
264
24
67 Traditional
70
Traditional
SEA 1 to 5
Total
134 Total
152
5
6
Frontier
Frontier
24th (2006/7)
62 Promote
65
Promote
1411
258
246
17
80 Traditional
79
Traditional
SEA 1 to 6
Total
147 Total
150
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UKCS Initiatives to Encourage Exploration
24th Round
•
•
•
•
•
•
17 New Players
246 Blocks licensed
16 Wells committed to
79 Traditional licences
6 Frontier licences
65 Promote licences
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UKCS Initiatives to Encourage Exploration
Promote Licence Update to end 2006
•
23 of the original 54 Promote Licences issued in the 21st Round
have moved into Phase 2
• 15 with a Firm well commitment or Development Plan
• 8 to shoot new 3D seismic with a Contingent well; all
must be drilled by September 2007
– 7 of these have been drilled already
•
23 of the 58 Promote Licences issued in the 22nd Round moved
into Phase 2 in December 2006
• 13 with a Firm well commitment
• 10 to shoot new 3D seismic with a Contingent well; all
must be drilled by September 2008
– 2 of these have been drilled already
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UKCS Initiatives to Encourage Exploration
SEA Process continues
20th March 2007
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UKCS Initiatives to Encourage Exploration
Fallow
Early round licences were
multi-block, and if the initial
term obligation was fulfilled
with a Development
somewhere on the licence,
companies could retain
acreage into the second term
for up to 46 years without any
further activity!
20th March 2007
Round
Why was an Initiative needed?
8
8
8
8
8
18
18
24
18
18
18
18
18
18
36
36
36
36
39
40
47
47
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
1950
46
46
1970
1990
2010
Year
NPS Conference – EXPLORATION REVIVED
2030
Conoco
Shell
Amoco
Arco
Mobil
Total
British Gas
Hamilton
BP
Britoil
Texaco
Phillips
Amerada Hess
Chevron
Enterprise
Marathon
Esso
Lasmo
Fina
Elf
Kerr McGee
Occidental
Unocal
Agip
Ranger
Premier
Deminex
Mustang
Brabant
Union Texas
Ultramar
Sovereign
Superior
Clyde
Oryx
Bow Valley
Kelt
Mid. & Scottish
Ocean
Croft
Sun
Goal
Gulf
Acreage (sq kms)
UKCS Initiatives to Encourage Exploration
Fallow
Total Acreage held by Company in September 1994
16000
14000
12000
10000
8000
6000
4000
2000
0
Company
20th March 2007
Acreage 30/09/94
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UKCS Initiatives to Encourage Exploration
Relevant Model Clause
•
Working Obligations
– “If at any time the Minister serves a notice in writing
on the licensee requiring him to submit to the
Minister, before a date specified in the notice, an
appropriate programme for exploring for petroleum
in the licensed area during a period so specified,
the Licensee shall comply with the notice;”
The programme would be of a kind which a Licensee seeking to exploit the licence
to the best commercial advantage could reasonably be expected to carry out in the
specified period, assuming it had the requisite competence and resources.
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Fallow Block Process Flow Diagram
FALLOW BLOCK
Out of initial term and no drilling for 4 years and no
dedicated seismic or other significant activity for 2 yrs.
DTI discussion with operator and Licensees.
At any stage DTI may
use powers to require a
well to be drilled or
forfeit the licence or part
thereof.
CLASS B
CLASS A
All that can be done is being done. New
field start-up in block. Change of
operator within a year or substantial
change of ownership in past 3 months
Technical barrier notification to
LOGIC/ITF for R&D direction
Regular review
Partnership misalignment, failure to meet
economic criteria or other commercial barriers.
DTI formal invitation to licensees for ‘activity report’
to take block out of fallow. After 3 months those
licensees with no viable way to progress block will
be invited to relinquish or assign.
If no progress, block placed on LIFT with links to
data package. Full commercial freedom to reach
a solution.
After 9 months DTI request firm strategy (FS) from
licensees or third parties for action. Those with no
FS will offer interest to those with.
Re-licence
20th March 2007
If after a further 3 months the Block is still on
LIFT then relinquish.
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UKCS Initiatives to Encourage Exploration
Classification into 26 Identifiers (Blocks)
A1 “Doing all that can be expected”
BH “Class B Hold”
A2 “Wells AFE'd”
BR “Class B Rescued”
A3 “Proprietary Seismic AFE'd”
B1 “No activity”
A4 “Seismic Reprocessing 2 year review”
B2 “Low level activity”
A5 “Seismic Reprocessing 1 year review”
B3 “Delayed by partner misalignment”
A6 “Infrastructure full or none available”
B4 “Delayed by third party issues”
A7 “FDP in preparation”
B5 “Delayed by infrastructure issues”
A8 “Subeconomic” (from class B)
B6 “Divestment planned”
A9 “Median Line issues”
B7 “Non-economic accumulation”
M
“Moratorium”
N1 “Not Fallow - Relinquished”
N2 “Not Fallow - New proprietary seismic”
N3 “Not Fallow - Well drilled”
N4 “Not Fallow - FDP or new production”
N5 “Not Fallow - no exploration area remaining”
N6 “Not Fallow - Licence in primary term”
R
20th March 2007
“Relinquishment notice submitted”
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Fallow Block Status
382 currently identified Fallow Blocks (pre 20th Round)
Activity completed (179 subareas with Wells
drilled or AFE'd in the last 3 years, New Seismic
shot or AFE'd, New Production or Development
Plans or significant Reprocessing under
review)
49
Current Licensees doing all that can be
expected (13 subareas)
179
97
13
20th March 2007
Activity plans agreed (97 subareas with Rescue
workplans and Drill or Drop decision dates)
Insufficient activity - currently advertised as
Fallow (49 subareas)
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UKCS Initiatives to Encourage Exploration
Fallow Block Impacts
Wells Drilled (78 on Fallow subareas)
78
150
New Seismic (17 subareas)
17
6
New Production or Development Plans
Approved on previously Fallow Blocks (6
subareas)
Re-licensed Blocks 138 (21st Round - 6, 22nd
Round - 11, 23rd Round - 69, 24th Round - 52)
62
138
Complete Relinquishments (62 whole subareas
once Fallow which will be offered in future
Rounds)
Partial Relinquishments (over 150 subareas
relinquished back to Fields or Discoveries)
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NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
Status of 304 Blocks which have been released on
website in 12 month process
Relinquished
Relinquishing back to Field or
Discovery
50
Rescued Temporarily
40
41
Rescued Old Operator Work Plan
33
Rescued New Operator Work Plan
30
20
22
21
14
24
Previously agreed Work Plan reviewed
17
Not Fallow - New proprietary seismic
Not Fallow - Well drilled
10
5
0
3 3
Not Fallow - FDP approved or new
production
FDP in preparation
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UKCS Initiatives to Encourage Exploration
Fallow Discoveries Process Flow Diagram
FALLOW DISCOVERY
Out of initial term and no drilling, dedicated
seismic EWT or other substantial activity for 4 yrs.
DTI Discussion with operator and licensees.
CLASS A
All that can be done is being
done. New field start up in block.
Change of operator within a year or
substantial change
of ownership in past 3 months.
Technical barrier notification to
LOGIC/ITF for R&D direction
Regular review.
At any stage DTI may use powers to
require licensees to submit a
development plan or forfeit the licence or
part thereof.
CLASS B
Partnership misalignment, failure to meet economic criteria
or other commercial barriers.
DTI formal invitation to licensees for ‘activity report’ to take
discovery out of fallow. After 3 months those licensees with
no plans to progress discovery will be invited to relinquish or
assign.
If no progress, discoveries placed on LIFT with links to data
package. Full commercial freedom to reach a solution.
After 18 months licensees and 3rd parties to propose firm
strategy (FS) for activity. Those without a firm strategy
assign interest to those with.
Re-licence
20th March 2007
After a further 6 months all discoveries with a FS which has
not been enacted, are relinquished. Those without a FS may
be placed in Class A
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
Fallow Discoveries Status
Activity completed (34 Discoveries) including 19
Wells and 15 Development Plans
7
34
Current Licensees doing all that can be expected
(102 Discoveries)
42
Activity plans agreed or pending Commercial
agreements (18 Discoveries)
24
18
Relinquished (24 Discoveries) of w hich 17 have
been Relicensed
102
Insufficient activity currently advertised as
Fallow (42 Discoveries)
New ly Fallow Discoveries under review (7
Discoveries)
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UKCS Initiatives to Encourage Exploration
Fallow Discoveries Impacts
Appraisal Wells Drilled (19)
7
Development Plans Submitted (4)
19
Development Plans Approved (15)
17
4
11
20th March 2007
15
New proprietary Seismic Acquired (11)
17 Discoveries Relicensed in the 24th
Round
7 Discoveries Relinquished w hich w ill be
offered in future Rounds
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
Fields which are now under Development or in Production
that were Fallow Discoveries or on Fallow Blocks
Duart
Pict
Wenlock
Horne
Seymour
Brechin
Munro
Goldeneye
Caledonia
Scoter
Maria
Chiswick
Thurne
Davy East
Saturn Area
Cutter
Broom
Braemar
Madoes
Carrack
Gadwall
Grove
Arthur
Wren
Farragon
Nuggets N4
Sycamore
Mirren
Playfair
TOTAL RESERVES (P + P) : c 450 mmboe
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UKCS Initiatives to Encourage Exploration
Promote UK
• BGS on behalf of DTI has mapped and
helped promote 25 undeveloped
discoveries and 101 leads since 2000
• Posters on the UKCS Geology have been
produced for display at NAPE and similar
events in North America and the UK to
encourage new entrants
• Prospect Fairs have been held annually in
December for the last four years in
conjunction with the PESGB
20th March 2007
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
Promote UK & Relinquishment Report Publication
Promote UK
Based upon Serica’s Block 47/18 Relinquishment Report
Promote UK
Taken from Serica’s Block 47/18 Relinquishment Report
Trap
One or more dip closed
traps is likely on the
footwall of the WNW-ESE
trending fault crossing the
centre of the block
Wells drilled
in block
One
Reservoir Age
Reservoir Formation
Late Permian
Leman Sandstone Formation
Area
Southern
Gas Basin
Reserves
Comments
Serica Energy estimate upside
gas reserves for whole block to
be 80 bcf
1967 dry well 47/18-1 did not test a valid
trap. There are potential exploration
targets in Upper Permian, Lower
Permian and Carboniferous reservoirs.
The nearest producing gas field is
Amethyst in adjacent block 47/13.
0° 36’ E
Block
47/18
0° 24’ E
53° 30’ N
47/18
WNW
ESE
TWT
(s)
Bacton& HaisboroughGroups
(Triassic)
Promote UK
Based upon Serica’s Block 47/18 Relinquishment Report
L ine
of s
ec ti
o
1.0
n
47/18-1
0° 36 ’ E
0 metres
SEA BED
HUMBER GP.
CHALK
Depth TVDSS
CROMER KNOLL
GROUP
Zechstein
Group
TRIASSIC
BACTON GP.
7,600
PERMIAN
CARBONIFEROUS
Geoseismic section (strike line) across block 47/18: interpretation by Serica Energy
Anhydrite
P romote UK
Taken from S erica’s Block 47/18 Relinquishment Report
ESE
B
TWT
(s)
Depths are in feet below KB
7,700
3000
10000
ESE
Source: The presence of the Amethyst Field less than 20 km to the north and the Saltfleetby
Field to the west indicates that Carboniferous coal measures are fully mature for gas
generation in the region.
Lower Permian Leman Sandstone Formation(in
Ametyst F
(in Amethyst Field, block 47/13):
7,800
Carboniferous
Net:Gross: 40-98%
Porosity: 11-25%
Permeability: 1-1000 mD
Carboniferous to
Low er Permian
1 .5
4000
Example well log across the Lower Permian Leman Sandstone Formation;
this is the principal target reservoir in block 47/18
Silverpit Formation
(Late Permian)
1 km
Interpretation by Serica Energy
Seal: The Leman Sandstone play requires that anhydrite and interbedded mudstone at the
base of the directly overlying Zechstein Group provide an efficient topseal; these are
140 feet thick in well 47/18-1. Halite beds wihitn the Zechstein Group provide a regional
topseal for all hydrocarbon accumulations in the Zechstein Group carbonates. An
intraformational seal is required to trap gas within all Carboniferous sandstone
reservoirs.
Risk: The presence of a trap that is sufficiently large to be economically viable is the principal
risk
Top Zechstein Group
Carboniferous
(undifferentiated)
Top Plattendolomit Fm
5000
1 km
Reservoir: The primary target reservoir is the Leman Sandstone Formation, 260 feet thick in
1967 well 47/18-1. In the Amethyst Field in block 47/13, net:gross ranges between 4098%, with the best reservoir properties being in aeolian dune facies. Upper Permian
Zechstein Group Hauptdolomit and Plattendolomit Formation carbonates are
secondary targets, and both were extensively cored in 47/18-1. Carboniferous
sandstones may provide another secondary target - sandstones of early Westphalian A
age are the reservoir for the onshore Saltfleetby gas field, 20 km to the west.
1 .0
15000
1.5
1 km
Claystone & siltstone
WNW
LEMAN SST FM.
1.0
TWT
( sec)
Two-way time (seconds) to the top of the Leman Sandstone Formation in
block 47/18; note the potential for traps along the footwall of the NW-SE
fault tracing across the centre of the block
Sandstone
2000
Bacton & Haisborough Groups
(Triassic)
Zechstein Group
(Late Permian)
53° 20’ N
ZECHSTEIN GP.
(Namurian to Westphalian)
53° 20’N
Geoseismic Section
Leman
Sandstone
Fm.
1.5
Map courtesy of Serica Energy, based on interpretation of 2D seismic data
0 Gamma 120 140 Sonic 40
HAISBOROUGH GP.
++ +++ +
++ +++ +
Carboniferous
(undifferentiated)
1 km
47/18-1
WEST SOLE GROUP
1000
47/18-1
WNW
Leman Sandstone Formation
(Late Permian)
Promote UK
0 feet
165 feet
QUATERNARY
JURASSIC
of se
ctio
n
LIAS
Lin e
Zechstein Group
(Late Permian)
Stratigraphic
Column
Depth TVDSS
0° 24 ’ E
53° 30’N
47/18
Base Zechstein Group (top Leman Sandstone Formation)
Approximate top Carboniferous (base Permian unconformity)
Seismic section (strike line) across block 47/18: the primary target reservoir is the
Lower Permian Leman Sandstone Formation. Carbonate units in the overlying
Zechstein Group are secondary targets, and there may be potential for additional
targets in the Carboniferous strata.
20th March 2007
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
STEWARDSHIP
•
•
•
Concern that some fields are not being invested in to their full
economic potential
Possible explanations:
– Capital constraints
– People constraints
– Materiality of benefits
– Partnership misalignment
– Shadow of decommissioning …
Work Group Recommendations
– Construct a framework for raising the game on Stewardship
– Replace Annual Field Report with simpler data submission
– Construct filtering indicators to highlight issues
– Map out process for Stewardship Improvement
– JV involvement
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UKCS Initiatives to Encourage Exploration
1-2 months
3-6 months
Sanctions
Annual Data
Return
Development
notice
Data analysis and
feedback
Options:
Change of
operator
DTI/JV meetings
Clarification
Discussions
Letter
identifying
concerns
Review
Technical and
commercial
solutions sought
Other sanctions
JV can revise
programme
Notice
served
Full audit
Use of expert for
technical issues
Any
remaining issues
following
clarification?
No
20th March 2007
Alignment
Reached?
Yes
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UKCS Initiatives to Encourage Exploration
Stewardship Current Status
Stage 1 Data Gathering completed for first phase 2006
– 224 Producing Assets
– indications of increasing spend on future opportunities
and development drilling
– development drilling activity still below 2001 levels
– 34 assets selected for detailed review
• Stage 2 Detailed Review of these 34 now in progress
• But this is an Annual process: Data Gathering commenced
in January 2007 for selection of further assets to target
•
The Energy Review 2006 required that Infrastructure
Owners review surrounding Exploration potential in
other Operators assets as well as their own
20th March 2007
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UKCS Initiatives to Encourage Exploration
Has it worked?
Drilling Activity over the last 11 years
Success Rate
(published Significant
Discoveries only)
140
120
16%
9%
100
80
60
24%
19%
Onshore
Appraisal
21%
23%
35%
31%
33%
20%
37%
19%
40
20
Onshore
Exploration
Offshore
Appraisal
Offshore
Exploration
19
95
19
97
19
99
20
01
20
03
20
05
0
20th March 2007
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UKCS Initiatives to Encourage Exploration
Fallow Process Helping to Drive Activity
20th March 2007
NPS Conference – EXPLORATION REVIVED
UKCS Initiatives to Encourage Exploration
Drilling Activity 2006
Exploration Offshore
– 29 wells
• Appraisal Offshore
– 39 wells
• Total 68 wells
•
•
– 18 of these were Obligation wells
– 12 wells were on Fallow B or B Rescued Blocks
– 4 wells were on Fallow B or B Rescued Discoveries
Half the Exploration or Appraisal Activity in 2006 resulted
from either Obligation or Fallow drilling
20th March 2007
NPS Conference – EXPLORATION REVIVED
Conoco
Shell
Amoco
Arco
Mobil
Total
British
Gas
Hamilton
BP
Britoil
Texaco
Phillips
Amerada
Hess
Chevron
Enterprise
Marathon
Esso
Lasmo
Fina
Elf
Kerr
McGee
Occidental
Unocla
Agip
Ranger
Premier
Deminex
Mustang
Brabant
Union
Texas
Ultramar
Sovereign
Superior
Clyde
Oryx
Bow Valley
Kelt&
Mid.
Ocean
Croft
Sun
Goal
Gulf
Alba
Apache
ATP
British
Borneo
Burlington
Carrizo
Centrica
Century
CH4
CMS
Consort
Dana
DNO Heather
Eclipse
EnCana
FirstENG
Oil
GDF
Highland
Hydr.
Res.
Intrepid
Iranian
Oil
Lundin
Maersk
Murphy
Newfield
Oilexco
Paladin
PanCanadian
PDA
Perenco
Petro-Canada
Petrofac
Powergen
PROMOTE
Ruhrgas
RWE
Dea
Statoil
Svenska
Talisman
Tullow
Tuscan
Venture
Veritas
Walter
Warwick
Wessex
Wintershall
10000
Acreage (sq kms)
UKCS Initiatives to Encourage Exploration
Comparison of Company Held Acreage 1994 & 2004
14000
12000
8000
6000
4000
2000
0
Company
20th March 2007
Acreage 30/09/94
Acreage 30/09/04
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UKCS Initiatives to Encourage Exploration
Comparison of Licensing pre Initiatives (2000 – pink
acreage) to post 24th Round (2007 – blue acreage)
20th March 2007
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Acknowledgments
•
Thanks go to Simon Toole, Director of the
Licensing, Exploration and Development
Branch, Energy Development Unit, at the UK
Department for Trade and Industry, for
permission to give this talk, and particularly to
Toni Harvey of the Exploration Team and Helen
Hichens, the Southern Field Team Leader, who
compiled all the Fallow Facts.
20th March 2007
NPS Conference – EXPLORATION REVIVED