The Oil and Gas Authority (OGA) has just launched the 29th Offshore Licensing Round offering more than 1,200 blocks on the UK Continental Shelf (UKCS).
With regards to their maximising economic recovery (MER) objective, it comes as no surprise that the blocks up for grabs consist of a number of frontier areas of the UKCS that were identified by last year's government funded seismic shoot on underexplored areas of the UKCS.
However, what is surprising is that on its debut licensing regime, the OGA have changed the current regime by launching the 'Innovate Licence' concept. This concept offers a flexible and pragmatic approach to licensing.
The new approach will allow licensees to work 'hand in hand' with the OGA to design an optimal work programme. Such development, at least from the outset, should enable more appropriate phasing of activity, rental fees and competency tests, and implements a stage-gate process for better monitoring of progress compared to the previous licensing regime.
With a greater degree in flexibility, in the fact that the maximum 9 year period can be split into three sub-phases however the Licensee wishes, coupled with the lower entry barriers, broader areas and lower farm-in hurdles that occur during the licence lifecycle, there is a sense of optimism in relation to revitalising exploration in the UKCS.
Despite this, commentators have questioned whether such incentives shall be sufficient to draw investor attention back to the UKCS.