UK offers tax boost as 26th bidding round opens

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Jan. 28 -- The British government announced a package of tax incentives worth up to £12 billion aimed at unlocking oil and gas reserves in the Atlantic frontier west of Shetland—an area estimated to contain 20% of the country’s remaining unexploited oil and gas reserves.

“The government recognizes the importance of the UK oil and gas industry to our economy and the dependable foundation it provides for the UK’s energy security,” said Chancellor of the Exchequer Alistair Darling.

“While we are trying to reduce our dependence on fossil fuels, we must and do recognize that this will be a long transition and our oil and gas reserves will continue to play a vital role in supplying our energy needs for many years to come,” Darling told members of Parliament.

“Today’s announcement will continue to support investment in the North Sea, the fuel this delivers, the contribution this makes to our economy, and the jobs and skills the industry supports and develops,” he said.

“The legislation, if approved by the House, will extend the field allowance, announced in Budget 2009, to remote deepwater gas fields, which are found in the west of Shetland area,” Darling said.

“Approval of the legislation will be sought no later than the end of March,” a Treasury spokesman said.

“One project that could stand to benefit from the allowance is the project to develop the Laggan and Tormore fields,” the Treasury spokesman said. “The project partners will consider the sanction of the project in Spring 2010.”

“If the project is sanctioned and proceeds on schedule, the first production of gas from Laggan and Tormore is expected by 2014," the spokesman said.

Malcolm Webb, chief executive of Oil & Gas UK, welcomed the announcement as a response to his organization’s calls for support from the government.

“While we still have to study the details, we are delighted that the government has responded to our calls for the allowance to be extended to the West of Shetland area,” Webb said.

“This could result in early investment of over £2 billion and another £12 billion over the next 8 years, ultimately bringing almost 2 billion [boe] of oil and gas into production,” Webb told the Scotsman newspaper.

“The establishment of this gas-delivery infrastructure will stimulate exploration as it will enhance the viability of future discoveries in this frontier area,” said Webb.

Offshore leasing round
The tax incentive coincided with an announcement by Britain’s Department of Energy and Climate Change of a new round of offshore licensing aimed at giving a further boost to the UK's offshore oil and gas industries.

“This record-breaking 26th Round includes areas of the Continental Shelf not as yet explored, and will provide a new boost to activity in the basin,” said Britain’s Energy and Climate Change Minister Lord Hunt.

“The round will help to secure the future of the UK's oil and gas industry which still provides three quarters of our energy needs and some 350,000 jobs,” Hunt said.

“Estimates suggest there are still around 20 billion boe, or possibly more, to be produced, and this latest licensing round will help ensure we realize this potential,” he said.

“As we make the transition to a low-carbon future, we must ensure we have secure energy supplies by making the best use of our indigenous energy resources in a safe and environmentally sound way,” he said.

The blocks offered include a number relinquished under the government and industry's “Fallow Initiative,” which stimulates activity on blocks where there had been no significant activity for three years.

The 14 blocks that were deemed as fallow in 2009 have either been fully, or partly, relinquished in time to be on offer in this round.

In addition, the ministry said that “the majority of areas licensed in the first licensing round in 1964 that have not been allowed extensions have been relinquished and are included for offer in the 26th Round.”

The ministry also said the government has introduced “a new frontier license with an extended 9-year exploration term for the West of Scotland area, which aims to encourage oil and gas exploration in an area in which geological data is as yet scant.”

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

Tullow Oil provides production update on Jubilee, other fields

07/01/2015 Tullow Oil PLC reported that gross production for the Jubilee field offshore Ghana averaged 105,000 b/d in this year’s first half, up from 102,000 ...

OGJ Newsletter

06/29/2015

Security through change

06/29/2015

At the start of this month the US Army published its "Energy Security & Sustainability (ES2) Strategy" report. 

Mubadala starts production at Nong Yao in Gulf of Thailand

06/29/2015 Mubadala Petroleum, Abu Dhabi, started production on June 17 from its Nong Yao oil field in the G11/48 concession of the southern Gulf of Thailand.

Junex provides update on Galt oil property drilling

06/26/2015 Junex Inc., Quebec City, Que., said it is finalizing construction of the surface drilling pad for the Junex Galt No. 5 horizontal well that the com...

Lundin spuds three wells offshore Norway

06/24/2015 Lundin Norway AS, a wholly owned subsidiary of Lundin Petroleum AB, spudded three wells: its second Alta appraisal well in the Barents Sea, an appr...

WPX Energy adds to acreage in Gallup oil play

06/22/2015 WPX Energy Inc., Tulsa, has added to its San Juan Gallup acreage in New Mexico with the purchase of another 14,300 net acres from an undisclosed se...

YPFB Andina makes oil discovery in Bolivia’s Boqueron field

06/22/2015 YPFB Andina reported an oil discovery in Boqueron field in Bolivia’s Santa Cruz region. The Boqueron 4D well reached a total depth of 3,237 m and h...

OGJ Newsletter

06/22/2015
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected