UK offers 300 blocks, approves revival of first offshore oil field

By the OGJ Online Staff

LONDON, Jan. 16 -- Argyll, the first oil field to be developed in the UK North Sea, is expected to return to production 11 years after it was closed as uneconomic.

The announcement came as the UK government offered 300 blocks in its 20th licensing round. The government also said three small North Sea gas developments will proceed.

The announcements were made simultaneously to the UK Parliament, the European Commission, and PILOT, a government-industry task force working to secure the long-term future of the UK oil and gas industry. PILOT met Wednesday in Aberdeen.

Argyll is expected back on stream next year. The UK Energy Ministry issued the Argyll licenses as part of an out-of-round program.

Hamilton Bros. Ltd. produced Britain's first North Sea oil at Argyll field in 1975 and BP PLC's Forties field followed 3 months later. Only an estimated 40% of Argyll's reserves were produced, but 10 years ago it and the nearby associated Duncan and Innes fields, which were by then operated by BHP Pty., were abandoned and the license relinquished after they deemed uneconomic. In 1992, BHP removed the Argyll platform, which was towed to the Far East.

Now for the first time in the North Sea, the three old fields are to be redeveloped. The license holders are Tuscan Energy Ltd., Aberdeen, and Acorn Oil & Gas Ltd., London -- both of which were formed specifically to investigate the development of old offshore assets.

Tuscan plans to use technology unavailable in 1992, principally horizontal wells, to produce zones inaccessible to the original development wells.

Argyll, Duncan, and Innes all are on Block 30/24. Tuscan and Acorn propose to redevelop Argyll first, with the opportunity to redevelop Duncan and Innes subsequently. Each field is covered by a separate license, with the fourth covering the rest of the block.

The UK Energy Minister Brian Wilson said, "These are exactly the kind of investments that we have been aiming for as part of our strategy, working with the industry, to extend the life of the North Sea and thus maintain production and employment.

"It's good to see two small new British companies, taking a fresh and imaginative look at the opportunities in the North Sea, and introducing productive new alliances with the supply chain."

In another out-of-round award, the energy ministry authorized ATP Ltd., a subsidiary of ATP Inc. of the US and CalEnergy UK Ltd., to develop a Block 43/21a gas discovery that has been lying fallow for 10 years.

Wilson said, "ATP is one of the new entrants that we have been working hard to attract to the UK to bring work to our fallow discoveries. Their focused, high-efficiency approach, developed in the Gulf of Mexico, will allow them to develop the 43/21a discovery and other fallow discoveries, which others may not see as economic."

CalEnergy holds 20% of Windermere, 18% of Johnston, 5% of Victor, and 2% of Schooner gas fields in the UK North Sea.

Speaking in Aberdeen as he announced the 20th round, Wilson said, "We want to get these licenses into the hands of companies who are hungry and innovative. It will be a busy spring for explorers and their activity resulting from this licensing round. We are convinced of the need to make sure that licenses are held by companies best able to work and invest in them. Twentieth round licenses will have very tight time limits so if they are not exploited by the license holder they can be passed to companies who will develop them."

Wilson also approved development plans for Madoes, Mirren, and Maclure fields. The latter, operated by ExxonMobil Corp., is on Block 9/19. The three satellite subsea developments will require a #200 million investment. Combined reserves are 60 million bbl of oil and nearly 100 bcf of gas.

The closing date for 20th round applications is Apr. 16. After 4 years, companies will surrender half of the license area and after 4 more years, the balance of any area not covered by development plans.

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