By the OGJ Online Staff
WASHINGTON, DC, March 8 --Producers are endorsing a UK plan designed to encourage development of the country's remaining North Sea reserves.
A BP PLC spokesman said the company "supports the thrust of the government's plans to prolong production in the North Sea," as announced by UK Energy Minister Brian Wilson earlier this week.
"We have already signed up to the industry Code of Practice, which is designed to overcome commercial and behavioral barriers to development which may currently exist," the spokesman said.
BP said it also approves of action to free up licenses: "We have no problem with this. Experience has shown that some fields suit smaller players, and others suit larger operators. In BP's case, in the last 2 or 3 years, a little under half of our undeveloped discoveries have been sold on to other companies," the company said.
Reserves remain
UK officials estimate there could be up to 35 billion boe of reserves left to produce in the maturing North Sea. A growing amount of that production is expected to come from independents, which typically are more willing to accept tighter margins.
"It is essential to have the right licenses in the right hands at the right time. We are moving towards that objective on a very encouraging consensual basis," Wilson said told an industry gathering Mar. 5.
The new voluntary regulations were developed as part of a joint industry-government task force, dubbed Pilot, which successfully met an investment goal of $5 billion for North Sea development in 2001.
The new rules set stricter investment deadlines on existing licenses and expand information available to companies interested in acquiring a concession. Licenses now will be considered inactive if no action is taken after 4 years. After that deadline, companies with exploration licenses have another 27 months to invest or risk losing the license. Companies that have fallow discoveries after the same 4 years have 15 months to draw up a development plan.
The UK currently has 250 fallow discoveries and 200 unused licenses, according to Wilson.
"Decline is inevitable, but the pace of decline can be significantly altered, and these fallow discoveries and fallow fields contain very substantial reserves,"' Wilson said.
