Oil and gas – guidance

Oil and gas: licence relinquishments

How to relinquish a licence for exploration and development by surrendering acreage or determining a licence, notice periods and required reports.

On 1st April 2015 certain functions passed from the Department of Energy and Climate Change (DECC) to the Oil and Gas Authority (OGA) a newly created Executive Agency of DECC

Overview

There are 2 ways in which a licensee can give up acreage:

  • ‘surrender’ part of the licensed area while the licence continues over the remaining area.
  • ‘determine’ the entire licence.

The licensee can do either one at any time, subject to a few conditions.

The OGA operates a Portal-based procedure for processing surrenders and determinations of offshore licences. Further guidance is available here

At the time of writing (January 2013), the Portal only handles offshore licences; surrenders and determinations of landward licences continue to be handled by email. We are working to integrate them into the Portal during 2013.

To surrender acreage or determine a licence, complete a licence determination form (below) for each licence and email them to licence.relinquishments@oga.gsi.gov.uk

Licence determination form

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Restrictions

There are 2 restrictions to the licensee’s right to surrender or determine.

  1. ‘Non-standard’ surrenders – irregular shapes defined by very short lines, or surrenders that leave a very small licensed area. The exact definition is in the clause titled ‘Areas surrendered’ within each licence (see the 2004 Model Clauses Regulations for example). Non-standard determinations require the Oil and GAs Authority (OGA) assent.
  2. A licensee may not make a surrender or determination if it would prevent fulfilment of a licence obligation, eg where a licence carries a work programme with a Firm Well Commitment, the licensee cannot determine the licence without drilling the well (or surrender acreage if it includes a location specified in the commitment as the place where the well is to be drilled).

Notice periods

The OGA requires recent Seaward Production Licences (P1155 and later) to provide 1 month’s notice before determination/surrender. Be sure to submit the form in good time and specify an effective date at least 1 month in advance.

Older Seaward Production Licences specify 6 months’ notice. the OGA will often accept just one month’s notice but we reserve the right to insist on the full 6 months – especially where there is a need to plug and seal wells. Note: this may affect the licensee’s liability for rentals at the next licence anniversary, therefore the OGA strongly recommends licensees ensure there are no producing or suspended wells on any acreage before they seek to surrender/relinquish it.

Company loss of licence involvement

Even though a surrender may occasionally leave a company without beneficial interest under the licence, the surrender does not remove that company from the licence. It will remain a party to the licence unless and until it withdraws by assigning its rights to the remaining companies. An assignment is often made effective on the same date as the surrender, but it does not need to be. Note: all assignments require the Secretary of State’s permission; enter the name of the departing company at Q9 on the form to apply.

Relinquishment reports

The OGA requires a relinquishment report at the time of determination for all Seaward licences from P1064 upwards. This requirement is conferred by the Model Clauses and invoked by a paragraph within the covering letter that accompanied each new licence issued in the 21st and later rounds. PILOT and the OGA also agreed the requirement for relinquishment reports with submissions from older licences for a full licence relinquishment or relinquishment of whole blocks/part blocks in multiblock licences. Reports are also required for Landward Licences.

The reports must comply with the guidelines (below) and be submitted within 3 months of the request.

Guidelines for writing relinquishment reports

This file may not be suitable for users of assistive technology. Request an accessible format.

If you use assistive technology (eg a screen reader) and need a version of this document in a more accessible format, please email oga.correspondence@oga.gsi.gov.uk. Please tell us what format you need. It will help us if you say what assistive technology you use.

Relinquishment reports

The latest release in July 2016 has brought the total number of Relinquishment Reports published on the web site to 644. The first release in February 2008 consisted of 45 Licence Relinquishment Reports with further reports added every year. The next release is expected towards the end of 2016.

NOTE 1: Some Reports comprise more than one Licence, where they were relinquished in a similar time frame and cover adjacent acreage with related prospectivity.

NOTE 2: There is a occasionally a problem viewing the reports in IE 11, the work around is:

Click the tools icon, (a little gear in the top right of the browser), go to “Compatibility View Settings” then click the “Add” button and then “Close”, you may need to refresh the page

Neither the Secretary of State nor the Department of Energy and Climate Change accept responsibility for any of the information published above nor do they warrant the accuracy of any data supplied by the Secretary of State.

Address all queries about relinquishment reports to Jen Brzozowska at jen.brzozowska@oga.gsi.gov.uk or phone 0300 068 6030

Data retention obligations and the NHDA

The OGA takes seriously the obligation, borne jointly and severally by all licensees in the licence group at the time of determination, to hold licence data in perpetuity. The OGA will scrutinise long-term data management strategies at licence determination and reminds licensees the only way of gaining relief from this obligation is to place licence data in the National Hydrocarbons Data Archive (NHDA) – the OGA’s preferred option for storage.

Visit the NHDA website for more information or contact:

Completing the form

The OGA will assume the form has been submitted in accordance with the wishes of the entire licence group under the terms of the joint operating agreement (JOA) or similar agreement. The OGA cannot accept responsibility for ensuring compliance with the terms of a JOA, but would like to know when a dissenting party has been outvoted (see Q8). Please email applications where possible, but postal applications can be sent to:

Licensing Exploration and Developments (licence determinations)
Department of Energy and Climate Change
3 Whitehall Place
London
SW1A 2AW

Part 1: contact details

Include details of the person we should approach for further information, and to whom we should reply. Enter a return postal address at box 4 if you want a written response.

Part 2: nature of determination/surrender

  • enter the subject licence and the block(s). Also attach (or enclose) a map showing the acreage before the determination/surrender, indicating the position and status of any approved fields and wells within the licensed area.
  • for a surrender, indicate clearly which acreage is to be retained and which surrendered.
  • at Q6 indicate if you are determining the full licence. If you are, you can skip part 3.

Part 3: area to be surrendered

Do not complete this part if you are determining a full licence.

  • enter the grid coordinates that define the area to be surrendered (not the area to be retained). Use the suitable systems to define the coordinates: ED50 datum for offshore licences; National Grid datum for onshore licences. Show the location of all wells and fields within the currently licensed area.
  • specify any sub-area that lies wholly within the area to be surrendered, which will disappear as a result of the surrender.
  • name any company left without beneficial interest in the licence that will seek the Secretary of State approval for an assignment to withdraw.

Part 4: questions

  • name here any party to the licence that objects to the determination/surrender – even if it is not able to block it.
  • note any incomplete element of the initial term work programme (initial term licences only).
  • list each well on acreage that will become unlicensed, including details of its status (producing, suspended, abandoned, etc.).
  • specify any fallow acreage to be surrendered/determined.
  • enter the effective date of the surrender/determination, bearing in mind the strictures on notice periods (above).
  • add all other details you think we might need to know.

Publication of relinquishment/surrender reports

Through PILOT, the Government and oil and gas industry have been discussing ways to increase exploration activity. They decided potential future licensees could benefit from the dissemination of geotechnical understanding on acreage that has been worked and relinquished. PILOT decided the best way to achieve this would be through publication of relinquishment reports, which are prepared by relinquishing licensees and submitted to the OGA.

Relinquishment reports have been required on all licences since the 21st Round, as part of the licence issue covering letter. Promote licensees are required to provide a report at the two-year break point if the licence is not continuing. However the initiative to publish the reports, which was supported by Oil & Gas UK and OGIA, now also require reports where a whole licence or non-contiguous blocks in multi-block licences (of any vintage) are relinquished.

Subject to third-party data confidentiality checks, which are a responsibility of the operator producing the report, relinquishment reports will be published either on receipt by the OGA or after the next licence round if extended confidentiality is formally requested at the time of submission.

The OGA relies on the operator to confirm all necessary permissions have been obtained from any person, group, or company that may own the intellectual priority (copyright) within any material to be published. Clearance for publication must cover items such as:

  • seismic lines
  • reprocessed seismic data
  • extracts from commercial reports / maps / group-funded reports
  • maps
  • sections
  • well data

Contact information

Joy Gray
Senior Geoscientist – Promote UKCS
joy.gray@oga.gsi.gov.uk
0300 068 6034