The UK offshore regulator hailed the success of the country’s 30th Licensing Round this week as evidence that North Sea exploration is returning to health.

The Oil & Gas Authority (OGA) awarded 123 new licences covering 229 blocks or part-blocks to a “broad spectrum” of 61 companies, including established supermajors and new entrants.

This year’s round covered mature areas across the UK continental shelf, including some blocks not available since 1970.

It has been keenly watched as a test of the industry’s appetite for North Sea exploration, where faltering drilling levels have raised concerns about the long-term viability of the sector.

Officials said the awards showed the sector had turned a corner and should lead to new activity very quickly.

Commitments for eight firm exploration and appraisal wells were made by BP, Chrysaor, ConocoPhillips, Equinor (formerly Statoil), i3 Energy, Independent Oil & Gas and Shell.

Firms also made commitments for nine firm new 3D seismic surveys.

Some 14 licences, meanwhile, will progress straight to field development planning under second term licences.

The seven new entrants were Spark Exploration, Soliton Resources, Mytilus, Carrick Resources, Tangram Energy, Marque Oil & Gas and Petrostars SPX.

OGA chief executive Andy Samuel said: "The UK continental shelf is back. Big questions facing the basin have been answered in this round. Exploration is very much alive with lots of prospects generated and new wells to be drilled.

“The results show a great diversity of active players, from supermajors to new entrants, and the hard work promoting undeveloped discoveries is starting to pay off. I’m looking to industry to rapidly press ahead with these activities and maximise recovery from these great opportunities."

The OGA said if all the offers are taken up, the area under licence off the UK will expand by 50% on the existing acreage that is held.

The regulator said the round could unlock around a dozen undeveloped discoveries containing about 320 million barrels of oil equivalent.

OGA operations director Gunther Newcombe said: "After a period of low exploration activity, support from the OGA and government has helped kick off a revival in activity, as demonstrated by industry’s renewed interest through this licence round.

“It was particularly pleasing to see many companies identifying new prospects through the application of the latest seismic processing technologies and modern 3D surveys.”

Analysts agreed the round was a vote of confidence in the UK sector, but also cautioned that drilling levels need to pick up and more new projects must make their way into development.

About 14 to 15 exploration and appraisal wells are expected this year, similar to the last two or three years but significantly down on pre-2009 levels.

“The OGA's first mature licencing round, following the Norwegian model, appears to have been a great success,” said Kevin Swann of energy consultancy Wood Mackenzie. “The number of licences, blocks and companies awarded in this round is on a par with the numbers seen in the 28th round in 2016, but more exciting this time is that 14 licences will move straight into the field development planning stage.

“The eight firm exploration wells among the awards, with big companies like Shell, BP, Equinor and ConocoPhillips among those set to drill, is a big vote of confidence in the UK. It shows the big players are not ready to leave UK waters yet,” he said.

But Swann added that there is still work to do for the OGA.

“We're fast approaching the middle of 2018 and only two exploration wells have been drilled so far,” he said.

Deirdre Michie, chief executive of industry association Oil & Gas UK, said: “It’s great see so many companies submitting applications.

“We now need these opportunities to be pursued with a sense of urgency to help unlock activity for our hard-pressed supply chain and ensure we start to mitigate the potential drop-off in production post 2020.”

The OGA introduced several incentives, including the flexible new Innovate Licence and an extended 120-day application period, to stimulate interest.

Attention will now turn to the 31st Round, scheduled to be launched this summer, which will provide high-impact exploration opportunities in under-explored and frontier areas.

Weekly

UK's 30th round hailed as a success by the OGA