Summary

Onshore exploration in the United Kingdom has increased significantly since the beginning of 1980 following a five year period during which drilling activity had declined to its lowest level since the early 1950s. The increase in activity is attributable in part to the introduction in mid-1980 of revised arrangements for the issue of production licences and in part to the increase in world oil prices which took place in 1979.

The issue of Landward Licences by the Department of Energy is governed by the Petroleum (Production) Act, 1934, and by Regulations and amendments to that Act.

Until November 1972 onshore rights were granted either as mining licences or production licences. Mining licences are production rights valid for up to a maximum period of 75 years and are in general small licences covering discoveries made prior to the introduction of the Petroleum (Production) Regulations, 1966. Fourteen mining licences are still in force and production is obtained from several of these.

Production licences under the 1966 Regulations, a considerable number of which are still in force, gave both exploration and production rights and were issued over a maximum area of 500 km². Initial term of these licences was six years, following which 50% of the area was relinquished and the balance renewed for up to a maximum period of 40 years.

The basic framework under which licences are now issued was established by the 1972 amendment to the Regulations, at which time a distinction was drawn between exploration licences and production licences. Modifications in detail have been made to this framework by the introduction of the 1976 Regulations, the 1978 Arrangements, the 1980 Arrangements and the 1982 Regulations. These dealt largely with rentals payable, renewal periods and the right of the national oil company to participate in production licences (introduced in 1978, withdrawn in 1980) and to purchase up to a 51% share of crude oil production (introduced in 1980 and still in effect).

Exploration licences are issued for a maximum area of 500 km² and, until recently, carried an initial term of three years and a discretionary extension period of up to three more years. By recent amendment to the regulations, exploration licences are now issued for a single term of four years. These licences are valid for geological and geophysical surveys but for drilling to a maximum depth of only 350 m. A work programme is discussed with the Department of Energy as a part of the licence application procedure.

Production licences issued since 1972 are granted for a maximum area of only 250 km². The licence is valid for a four year initial term following which at least 50% of the licence must be relinquished. The licence may then continue in force up to a maximum of an additional 30 years. The licence is valid for exploratory work, including deep drilling, and for production of hydrocarbons. Production licences carry a work obligation, to be fulfilled during the initial four-year term. These minimum work programmes must be approved by the Department of Energy prior to issue of the licence.

Exploratory drilling onshore has been concentrated in three areas:

• (1) In central England in the Carboniferous rocks of the central province where principal reservoir objectives are Westphalian and Namurian sandstones. The majority of this drilling has taken place in the East Midlands and, by comparison, geologically similar areas west of the Pennine arch are less densely drilled.

• (2) In northeastern England in rocks of Permian age where principal reservoir objectives are Zechstein carbonates.

• (3) In the Mesozoic basins of southern England south of the London Platform where principal reservoir objectives are Triassic and Jurassic sandstones and middle Jurassic carbonates.

Other areas where hydrocarbon exploration has taken place include the South Wales coalfield, the Triassic and older sediments of the Worcester Graben and adjacent area of the concealed Oxfordshire coalfield, the Cheshire basin and the Midland Valley of Scotland. The results of this exploration are summarized as follows:

In the East Midlands some 20 oil discoveries have been made since the first onshore oil discovery at Hardstoft in 1918. Oil production from the area is currently running at some 1500–2000 barrels per day and the region remains the most active area of exploration activity onshore.

In North Yorkshire a number of gas discoveries have been made and small amounts of gas have been produced in the past from wells at Eskdale and Lockton. There is currently no production from this area; however, a number of active exploration programmes are in progress.

In southern England oil was discovered at Kimmeridge in 1959 and at Wareham in 1964. More recent discoveries have been made at Wytch Farm (1973, 1977) and Humbly Grove (1980). Gas was discovered at Bletchingley in 1965. Oil production from the area is currently running at approximately 3500–4000 barrels per day.

Other areas of small past production outside these main areas include shallow oil production from the Triassic at Formby in Lancashire and small amounts of both oil and gas from the Cousland/Midlothian anticline in the Midland Valley of Scotland.

Currently some 100 exploration licences and 74 production licences are in force involving, in total, more than 60 exploration companies. The majority of the production licences issued since 1980 are assumed to carry a commitment to drill at least one well during the initial term of the licence. It is estimated on this basis that exploratory drilling over the next 4–5 years will be at an average rate of some 10–15 wells per year.