Offshore Oil and Gas Licensing

Charles Hendry Excerpts

Wednesday 1st February 2012 Written Statements

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am pleased to inform the House that I am today inviting applications for petroleum licences for unlicensed seaward blocks which will form the 27th round of offshore petroleum licensing.

Supporting around 350,000 jobs and spending around £14 billion a year, the UK oil and gas industry plays a vital role in the UK economy and in meeting our energy needs. Indigenous oil and gas production supplies the equivalent of about one half of the UK’s primary energy demand. It is vital that we continue to do all we can to maximise economic recovery of indigenous hydrocarbon reserves. The licensing of new areas forms an essential part of this process enabling the exploration necessary to ensure we tap into, and fully realise, our remaining reserves—which could equate to around 20 billion barrels or perhaps more.

DECC’s draft plan to offer licences for offshore oil and gas exploration and production through a 27th licensing round was the subject of a strategic environmental assessment (SEA) completed in October 2011.

The assessment can be viewed here:

http://www.offshore-sea.org.uk/sit/scripts/book_info.php?consultationID=17&bookID=18

The SEA includes commissioned reports on various components of the natural environment and effects of previous activities.

The potential implications of the exploration and production activities that could follow if the draft plan was adopted were considered at an expert assessment workshop and a series of stakeholder workshops. The results of these workshops were assessed further and documented in an environmental report that then formed the basis for consultation with consultation bodies and the public. The three-month consultation period on DECC’s draft plan and the environmental report was advertised in a number of local and national newspapers and emailed to a wide range of individuals and organisations.

DECC has considered all responses and a post consultation report for the latest offshore energy SEA was prepared and in August 2011 placed on the SEA website.

The post-consultation report can be viewed here:

http://www.offshore-sea.org.uk/site/scripts/consultation_download_info.php?downloadID=285

This summarises consultee comments and DECC responses to them. In the 12 October 2011 statement to Parliament on the assessment we announced our intention to make preparations to proceed with this 27th offshore licensing round.

Outcomes

In deciding to proceed with a 27th offshore licensing round, DECC has had regard to the conclusions and recommendations of the environmental report and consultation feedback. As a result of the SEA process, blocks in the deepest waters of the south-west approaches are currently not being offered as part of the 27th round of offshore petroleum licensing because of inadequacy of data including data on potentially vulnerable components of the marine environment.

A number of blocks excluded from earlier licensing rounds on the basis of recommendations of previous SEAs, or currently in the process of appropriate assessment consultation, are currently not being offered as part of the 27th round of offshore petroleum licensing.

The environmental report recommended the blocks in or overlapping with the boundaries of the Moray Firth and Cardigan Bay SACs should also be withheld from this licensing round for the present pending conclusion of the further assessments initiated following the 24th licensing round applications. We have therefore excluded at present 14 blocks in the Cardigan Bay area and 12 in the Moray Firth from this round of offshore petroleum licensing.

In addition, some blocks are currently withheld from this round of offshore petroleum licensing at the request of the Crown estate as they overlie the Cleveland potash mine, and some at the request of the Ministry of Defence due to them being used for intense military testing and training.

Licensing of the blocks not currently included in this round may be revisited in the future, as more information on those blocks becomes available.

In addition, a number of blocks may be licensed but with conditions attached restricting or prohibiting certain marine activities. It should be noted that the—Offshore Petroleum Production and Pipe-lines (Assessment of Environmental Effects) Regulations 1999—(as amended) and the—Offshore Petroleum Activities (Conservation of Habitats) Regulations 2001—(as amended) variously require that all major activities undertaken in connection with UK offshore hydrocarbon exploration and production are subject to environmental assessment before consent can be given for these activities.

Before any licence awards are made, DECC will assess whether the grant of licences applied for in the 27th round is likely to have a significant effect on the management of any protected conservation sites. Where such effects cannot be excluded, a further detailed assessment will be needed to determine whether there are any adverse effects on the integrity of these protected conservation sites. This is required under Council Directive 92/43/EEC on “the conservation of natural habitats and wild fauna and flora”, and UK implementing regulations.

DECC has, with industry and statutory environmental advisers, established an offshore oil and gas environmental monitoring committee charged with co-ordinating the strategic monitoring of potentially significant environmental effects of the industry, including those that could arise from the implementation of the plan to hold a 27th round of offshore licensing.