UK awards licenses; companies question immigrant cap

Nov. 8, 2010
Britain's Department of Energy and Climate Change offered 144 licenses to 83 companies for 268 blocks in the North Sea.

Eric Watkins
Oil Diplomacy Editor

Britain's Department of Energy and Climate Change offered 144 licenses to 83 companies for 268 blocks in the North Sea. "Whilst in the long term, we want to decarbonize our energy system, we have moved swiftly to offer these licenses as we must realize the optimum value from the UK's energy resources and ensure secure energy supplies," said Energy Minister Charles Hendry.

UK oil production peaked in 1999 at 2.6 million b/d and is declining by an estimated 5%/year. While government officials say there are still 20 billion boe to be found and produced in the North Sea, production is expected to drop to 1 million b/d in 5 years from the current 1.36 million b/d.

The number of awards is down from the 192 licenses awarded to 100 companies in the last licensing round in 2008. But 99 additional blocks—representing a further 45 prospective licenses—could become available after more detailed assessments of the likely affects on protected nature conservation areas.

"We remain absolutely vigilant and determined to ensure that exploration in our waters is done safely and with minimal impact to the environment," Hendry said, in a clear reference to problems suffered by BP PLC in the recent Macondo well blowout in the deepwater Gulf of Mexico.

Hendry stressed London's commitment to safety following criticism from some groups that no moratorium had been imposed on deepwater drilling in the North Sea pending full investment of the gulf accident.

The announcement of the awards coincided with reports that oil majors operating in the UK have warned that government plans to introduce new limits on immigration could delay projects and increase costs, even as the North Sea is feted as undergoing a rebirth. The industry's trade association and leading companies, including Chevron Corp. and Total SA, say the UK's more-stringent immigration requirements could keep out key industry professionals needed to develop ambitious projects.

"There is a real fear with every one of the bigger players and some of the bigger contractors," Patrick Taylor, Chevron Europe Upstream Human Resources Manager told Dow Jones News. "They know that the skills they need aren't available in the UK. There just aren't enough people across the industry to make projects happen."

The UK completed a consultation into implementation of an immigration limit in September, with final policy changes to be implemented in April. Government officials meanwhile insist that the new policy will not impede the flow of needed talent.

"As we control our borders and bring immigration to a manageable level, we will not impede you from attracting the best talent from around the world," said UK Prime Minister David Cameron at the annual conference of the Confederation of British Industry.

But a temporary cap on immigration introduced in June has already affected the plans of international oil companies, according to executives.

The temporary cap limits the number of skilled and highly skilled workers companies can bring in from outside the European Union until the annual limit is introduced in April.

Meanwhile, echoing Cameron, a government spokesman said, "We will be looking at the level of that cap and at the way in which it operates and making sure that works in a way that allows business to bring the people that they need into the UK."

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