1. www.og.dti.gov.uk OG-LED AND THE UK ONSHORE OIL AND GAS INDUSTRY GEOFF SWANN SENIOR GEOLOGIST DEPARTMENT OF TRADE AND INDUSTRY

2. www.og.dti.gov.uk Purpose of the talk Explain role of OG-LED Highlight selected issues Demonstrate that there is a future for the onshore oil and gas industry Regulation Promotion (Oil and Gas - Licensing, Exploration and Development)

3. www.og.dti.gov.uk The new OG-LED organisation and its objectives The licensing system Web services and data release Environmental issues Coalbed methane and mines gas Agenda

4. www.og.dti.gov.uk Where does OG-LED fit in DTI?

5. www.og.dti.gov.uk DTI Ann Eggington Markets and Policy Jim Campbell Environment & Decommissioning Ian Todd Industry Support Stewart Robinson IT Stephen Byers Secretary of State for Trade and Industry Peter Hain Minister for Energy & Competetiveness in Europe Sir Michael Scholar KCB Permanent Secretary Anna Walker Director General Energy Geoff Dart Director Oil and Gas (OG) Simon Toole Director OG-LED

6. www.og.dti.gov.uk OG-LED Exploration Team Northern Area Field Team (Aberdeen) Peter Haile Promotion Team Knowledge Team (data) & Onshore Exploration & Development Central Area Field Team Southern Area Field Team Merged exploration and development into a single team Simon Toole Director OG-LED Mike Hawkins Licence administration

7. www.og.dti.gov.uk OG’s objective is to To maximise the economic benefit to the UK of its hydrocarbon resources, taking into account the environmental impact of hydrocarbon development, and the need to ensure secure, diverse and sustainable supplies of energy for business and consumers at competetive prices.

8. www.og.dti.gov.uk Objectives for 2010 (OGITF Targets) Production at 3 million barrels of oil equivalent per day Investment in UKCS activity sustained at £3 billion per annum Commitment to prolonged self sufficiency in oil & gas

9. www.og.dti.gov.uk UK onshore fields produce c 31 mmboe pa but some 25 mmboe is from Wytch Farm * (* 2001 “Brown Book” operator’s estimate of peak production. Does not include fields in Mining Licences) How does the onshore fit in?

10. www.og.dti.gov.uk Benefits of the UK onshore industry Employment Regeneration - especially in coalfield areas Local power/gas supply Technology export and spin-offs Environment

11. www.og.dti.gov.uk The Licensing System Current status Future plans Out-of-Round licence awards

12. www.og.dti.gov.uk Onshore licensed areas

13. www.og.dti.gov.uk ML 7 188 km 2 Current onshore licences: AL 4 205 km 2 DL 5 42 km 2 PL 28 1733 km 2 EXL 37 6342 km 2 PEDL 97 24483 km 2 TOTAL 178 32992 km 2

14. www.og.dti.gov.uk Wells and discoveries 1990 - 2000 Beckering Pickering Saltfleetby Airth Fiskerton Airfield Cold Hanworth Keddington Newton on Trent Reepham Cowden Lingfield

15. www.og.dti.gov.uk Healthy licensing position - we want to keep it that way Range of new developments from mines gas to Saltfleetby Successful 9th Round - 43 licences issued Continued interest for both conventional hydrocarbons and cbm/mines gas Need more drilling activity Encourage new entrants Looking for operators to explore new potential Summary

16. www.og.dti.gov.uk OG-LED intends to hold a 10th Round in late summer/autumn (depends on 20th offshore Round timing) Discourage acreage banking Review to ensure licensed acreage is being explored No waivers on firm wells Drill or drop options will be enforced No extensions to PEDL initial terms PEDL “2nd” terms - need development plan approved before 3rd term commences (no extensions) Consider changes to model clauses / regulations Want to remain flexible - what does industry want? Future plans

17. www.og.dti.gov.uk Out-of-round awards Only made in exceptional circumstances Generally require 90 day OJ notice Can be restricted to adjacent licensees Not a back-door route to acreage To facilitate development Operational reasons

18. www.og.dti.gov.uk Web services DTI would encourage an onshore website DEAL - data market place Web based licence assignment system - by end 2001 Onshore well and licence data on DTI’s website

19. www.og.dti.gov.uk

24. Data Release UKOGL - a continuing success. Library will continue to be supported by DTI. Is there scope for similar initiatives? Can we publish licence applications and/or reports? Need agreement from old and existing licensees What formats would we use (cost)? Available for inspection (and copying)?

25. www.og.dti.gov.uk Environmental issues Legislation administered by DETR, EA/SEPA and local authorities OG-LED has an advisory role Landfill Directive - reinjection of third party liquid waste will be prohibited Foot and mouth - follow MAFF/local authority guidelines PEDL does not give right of access OG-LED will be flexible over drilling and seismic commitments

26. www.og.dti.gov.uk Coalbed Methane & Mines Gas Petroleum Exploration and Development Licence vs Methane Drainage Licence MDL - for mine safety purposes only: DTI will not compromise safe working practices MDL does not give right to drill for gas but PEDL holder can not drill over or near a mine PEDL and MDL holders should reach agreement without DTI intervention DTI will not tolerate “back door” developments

27. www.og.dti.gov.uk Want to know more? Geoff Swann 020 7215 5062 geoff.swann@dti.gsi.gov.uk www.og.dti.gov.uk