Petroleum has been produced in small quantities on the UK mainland for centuries. The first commercial find of petroleum was in 1918 in Nottinghamshire. Wytch Farm in Dorset, the first major onshore oil field in the UK was discovered in 1973 and is now the largest onshore oil field in Western Europe. The first significant discovery of offshore gas, in the West Sole Field, was made in 1965. Development of the North Sea fields began in the mid-1960s. By the beginning of 2000, there were 109 oil fields, 87 gas fields and 16 condensate fields in production offshore.
By the start of 2000, a total of some 2,445 million tonnes of oil and 1410 billion cubic metres (bcm) of gas had been produced from UK fields. Despite the maturity of the United Kingdom and its Continental Shelf as a petroleum province, there was still potential for further activity in both mature and frontier areas. The Government was keen to maximise the economic level of exploration and development so that additional oil and gas reserves could be proved and developed to replace those that were being depleted. The 'Brown Book', the Department of Trade and Industry's annual report on the development of oil and gas resources, provides estimates of the discovered recoverable reserves, potential additional reserves and undiscovered recoverable reserves for both oil and gas.
Legislative framework for Licences: The Petroleum Act 1998, which consolidated a number of provisions previously contained in five separate pieces of primary legislation (including the Petroleum (Production) Act 1934), vests ownership of oil and gas within Great Britain and its territorial sea in the Crown and gives the Government rights to grant licences to explore for, and exploit, these resources, and those on the UK Continental Shelf (UKCS). The designated area of the UKCS has been refined over the years by a series of designations under the Continental Shelf Act 1964, following the conclusion of boundary agreements with neighbouring states, the most recent being the agreement reached with the Faroe Islands in May 1999.
Regulations re-enacted under the 1998 Act set out how applications for licences may be made and specify the Model Clauses to be incorporated into the licences. The regulations currently in force are the Petroleum (Production) (Seaward Areas) Regulations 1988 as amended by the Petroleum (Production) (Seaward Areas) Amendment Regulations 1990, 1992, 1995 and 1996 for offshore licences; and the Petroleum (Production) (Landward Areas) Regulations 1995 for onshore licences.
All applications for production licences are assessed against the same criteria. Decisions about licence awards take account of the applicant's financial, technical and environmental capabilities as well as the geological rationale for the application, and the proposed work programme that will be carried out in the event of a licence being granted.
Licence Types: The terms of licences vary according to whether they cover Seaward or Landward areas. The terms, duration and relinquishment requirements, as set out in the licensing regulations, vary between Licensing Rounds and are dependent on the amount of exploration and development that has already taken place in the area of the acreage on offer. Whilst applications for Landward and Seaward Licences are assessed on the basis of the same criteria, the respective licensing rounds are held separately.