Two-way time (seconds) to the top of the Leman Sandstone Formation in block 47/18; note the potential for traps along the footwall of the NW-SE fault tracing across the centre of the block

UKCS Initiatives to Encourage Exploration

STEWARDSHIPConcern that some fields are not being invested in to their full economic potentialPossible explanations:Capital constraintsPeople constraintsMateriality of benefitsPartnership misalignmentShadow of decommissioning Work Group Recommendations Construct a framework for raising the game on StewardshipReplace Annual Field Report with simpler data submissionConstruct filtering indicators to highlight issuesMap out process for Stewardship ImprovementJV involvement

UKCS Initiatives to Encourage Exploration

SanctionsDevelopment notice Change of operatorOther sanctions

UKCS Initiatives to Encourage Exploration

Stewardship Current StatusStage 1 Data Gathering completed for first phase 2006224 Producing Assetsindications of increasing spend on future opportunities and development drillingdevelopment drilling activity still below 2001 levels 34 assets selected for detailed reviewStage 2 Detailed Review of these 34 now in progressBut this is an Annual process: Data Gathering commenced in January 2007 for selection of further assets to targetThe Energy Review 2006 required that Infrastructure Owners review surrounding Exploration potential in other Operators assets as well as their own

UKCS Initiatives to Encourage Exploration

Has it worked? Drilling Activity over the last 11 years

Chart1

643820

724061

6135122

473359

172062

263386

243651

1628140

261931

293430

413762

293987

9%

16%

24%

19%

35%

23%

33%

Success Rate (published Significant Discoveries only)

37%

19%

20%

21%

31%

Offshore Exploration

Offshore Appraisal

Onshore Exploration

Onshore Appraisal

Sheet2

Year199519961997199819992000200120022003200420052006

Offshore Exploration647261471726241626294129

Offshore Appraisal384035332033362819343739

Onshore Exploration26125685143368

Onshore Appraisal012926101027

Success Rate (published Significant Discoveries only)9%16%24%19%35%23%33%37%19%20%21%31%

Discoveries61215966865699

Sheet2

0000

0000

0000

0000

0000

0000

0000

0000

0000

0000

0000

0000

9%

16%

24%

19%

35%

23%

33%

Success Rate (published Significant Discoveries only)

37%

19%

20%

21%

31%

Offshore Exploration

Offshore Appraisal

Onshore Exploration

Onshore Appraisal

Sheet3

00

00

00

00

00

00

00

00

00

00

00

00

Year

Well Numbers

Exploration and Appraisal Activity

UKCS Initiatives to Encourage Exploration

Fallow Process Helping to Drive Activity

UKCS Initiatives to Encourage Exploration

Drilling Activity 2006Exploration Offshore29 wellsAppraisal Offshore39 wellsTotal 68 wells18 of these were Obligation wells12 wells were on Fallow B or B Rescued Blocks4 wells were on Fallow B or B Rescued DiscoveriesHalf the Exploration or Appraisal Activity in 2006 resulted from either Obligation or Fallow drilling

UKCS Initiatives to Encourage Exploration

Comparison of Company Held Acreage 1994 & 2004

UKCS Initiatives to Encourage Exploration

Comparison of Licensing pre Initiatives (2000 pink acreage) to post 24th Round (2007 blue acreage)

UKCS Initiatives to Encourage Exploration

AcknowledgmentsThanks go to Simon Toole, Director of the Licensing, Exploration and Development Branch, Energy Development Unit, at the UK Department for Trade and Industry, for permission to give this talk, and particularly to Toni Harvey of the Exploration Team and Helen Hichens, the Southern Field Team Leader, who compiled all the Fallow Facts.