•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    UK announces unconventional petroleum licensing model clauses

    Alastair Young, Darren Spalding, Nick Kendrick, Bracewell & Giuliani LLP

    Energy Minister Michael Fallon took the opportunity on 24 June 2014 at the UK Shale Conference to cite the energy security crises in the Ukraine and Iraq as further reason for the UK to focus on shale gas and oil exploration.

    In the latest step towards the development of the UK shale industry, revisions to petroleum licence Model Clauses will be implemented to accommodate the practicalities of fracking compared with recovery of conventional resources. Specifically, and recognizing that shale plays may cover vast areas (see, for example, the Bakken formation in North America and the Bazhenov formation in Russia), existing rules relating to operations and retention of acreage will be amended to allow greater flexibility for unconventional resource development.

    Whilst we await further details of the new regime, it appears that concepts include “Production Plans” relating to specific areas of the licensed area and “Retention Agreements” allowing the licensee to retain acreage subject to approved work plans. Given that neither of these is particularly revolutionary (we already have development and production programs, field delineation and phased relinquishment under the existing licensing regime), it will be interesting to see the specifics that facilitate shale development. We might, for example, expect to see bespoke provisions relating to appraisal operations, continuous production and longer holding periods. The Government, however, is particularly cognizant of the issue of “land-banking”, and is apparently keen to dissuade licensees from sitting on large acreages by requiring “plans for meaningful activity” (although the precise meaning of this requires clarification).

    The Government will also look to enhance access rights to information regarding operations. DECC will require licensees to submit well reports and production data, with confidentiality protection reduced significantly from four years to just six months. This is in line with offshore plans mooted for the UK, which see enhanced data sharing between operators as key to stimulating production, and will be a consideration for companies looking to take positions in the 14th Onshore Licensing Round that is expected later this year.

    This announcement is certainly encouraging for the UK shale industry, and we await the text of the new Model Clauses with anticipation and interest; DECC’s current narrative of the Petroleum Model Clauses (Amendment) Order 2014 as “Make licenses accommodate shale gas; permit onshore exploration; and otherwise make routine updates to onshore model clauses” is certainly not giving much away for now.

    About the authors
    Alastair Young, a partner and corporate lawyer in the London office of Bracewell & Giuliani LLP, focuses on the energy and natural resources sector. His experience includes UK and international mergers and acquisitions, cross-border joint ventures and the development of major energy projects.
    A partner in the London office of Bracewell & Giuliani, Darren Spalding’s corporate practice is focused on the energy sector. He advises clients on upstream, midstream and downstream oil and gas M&A transactions, with a particular emphasis on cross-border deals, having advised on transactions involving assets in more than 30 jurisdictions.
    Nick Kendrick represents clients in transactional matters within the energy sector, particularly in the upstream oil and gas industry. Based in Bracewell’s London office, he has experience on a variety of international energy transactions, including oil and gas, power and LNG.

     

    Most Popular

    Related Articles

    Oil and gas in Egypt

    06/09/2015

    North African Nation still a destination for global investment

    UKOOG and GMB reach landmark agreement on shale gas

    06/09/2015

    United Kingdom Onshore Oil and Gas (UKOOG) and the GMB, a UK general trade union, have agreed on a joint charter on shale gas, focusing on safety, skills, and supply chain development.

    Conoco halts shale gas operations in Poland

    06/08/2015

    ConocoPhillips has halted its shale gas exploration in Poland because of unsatisfactory results, Reuters says.

    CNPC discovers 100M tonnes of tight oil in Changqing field

    05/27/2015

    China National Petroleum Corp. has discovered more than 100 million tonnes of tight oil in its Changqing field, said Reuters, citing company-run newspaper China Petroleum Daily.

    Questerre signs MOU to appraise, develop shale blocks in Jordan

    05/26/2015 Canada's Questerre Energy Corp. has entered into a memorandum of understanding with the Ministry of Energy and Mineral Resources of the Hashemite Kingdom of Jordan for the appraisal and development...

    NZEC relinquishes East Cape permit in New Zealand

    05/22/2015

    New Zealand Energy Corp. has relinquished Petroleum Exploration Permit (PEP) 52976 (East Cape) in the East Coast Basin of New Zealand’s North Island.

    More Oil & Gas Financial Articles

    Oil and gas in Egypt

    Tue, Jun 9, 2015

    North African Nation still a destination for global investment

    UKOOG and GMB reach landmark agreement on shale gas

    Tue, Jun 9, 2015

    United Kingdom Onshore Oil and Gas (UKOOG) and the GMB, a UK general trade union, have agreed on a joint charter on shale gas, focusing on safety, skills, and supply chain development.

    Conoco halts shale gas operations in Poland

    Mon, Jun 8, 2015

    ConocoPhillips has halted its shale gas exploration in Poland because of unsatisfactory results, Reuters says.

    CNPC discovers 100M tonnes of tight oil in Changqing field

    Wed, May 27, 2015

    China National Petroleum Corp. has discovered more than 100 million tonnes of tight oil in its Changqing field, said Reuters, citing company-run newspaper China Petroleum Daily.

    Questerre signs MOU to appraise, develop shale blocks in Jordan

    Tue, May 26, 2015

    Canada's Questerre Energy Corp. has entered into a memorandum of understanding with the Ministry of Energy and Mineral Resources of the Hashemite Kingdom of Jordan for the appraisal and development of oil shale acreage in Jordan.

    OGFJ photo of the day


    Click to view slideshow

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ