FALLOW BLOCKS PROCESS – CLARIFICATION NOTES
The PILOT initiative for stimulating activity on fallow blocks was introduced two
years ago. Since then, the Department has made some refinements and
interpretations as they have become necessary to implement the initiative.
This note is intended to clarify the formal process that was announced in March
2002, outlining how the DTI may regard the level of activity on blocks that might
be considered to be Fallow. It should be noted, however, that this is for guidance
only and that interpretations are made on a case by case basis.
Clarification Notes have been added in highlighted italics to the original PPWG
proposals below.
Note that clarification has also been appended to the Fallow Discoveries
process, which is different from that for Fallow Blocks.
STIMULATING ACTIVITY ON FALLOW BLOCKS
Scheme
1. Drawing on the "fallow blocks" exercises of the past few years and discussion with
operators and co-licensees on a case by case basis, the Department will draw up a list
of those blocks(1) that it considers to be fallow(2). The list will be divided into two
classes:
CLASS (A) Those where the current licensees are doing all that a technically
competent group with full access to funding could reasonably be expected to do(3),
and
CLASS (B) Those where the current licensees are unable to progress towards activity
due to misalignment within the partnership, a failure to meet economic criteria, other
commercial barriers or a combination of these.
2. For blocks in Class (A) where a technical barrier to progress had been identified, the
Department may request that a short description of the barrier be communicated to
LOGIC/ITF if this is seen as necessary to promote direction for technical research and
development. Class (A) blocks will be reviewed after 2 years.
3. For Class (B) blocks, the individual licensees will be formally invited to consider and
report on whether, in their view, activity to take the block out of the fallow definition is
feasible and whether a re-allocation of interests would facilitate this.
4. After 3 months, the Department will invite those licensees who do not see a viable
way to progress the block either to relinquish that part of the licence containing the
block or to assign it to those licensees who do. The Department will be willing to subdivide the licence or consider appointment a new operator if this will facilitate activity.
Where a divestment is under serious consideration for an incoming Licensee to
become Operator (e.g. Sale and Purchase Agreement signed) for a block after it
has been classed as Fallow (B), a class B Hold (BH) may be assigned if the block
has not yet been publicised on the web site, or B Rescued (BR) if it has already
been announced. This would allow time for the transfer to take place without
complication.
Within a month following transfer, the new Operator should provide a
programme of work, not exceeding one year, which must be agreed with the DTI.
The programme must be timed, and lead to definite planned significant activity
on the block. On agreement of the programme, the block will be retained as B
Hold (BH) or B Rescued (BR) until a commitment is made (i.e. a signed AFE) to
significant activity, when the block would be reclassified as (A).
Failure to implement the programme will result in the block being released onto
the website immediately for 12 months if the block has not already been
publicised on it, or, for blocks that have already been publicised on the website,
put back on the website for the remainder of the twelve month period from the
date it was rescued (BR).
5. All Class B blocks relinquished as a result of step 4 will be offered for re-licensing
and data relating to the block will be made available promptly and listed on DEAL.
Where a block containing a discovery might potentially be relinquished, the
Discovery may be retained. A “pseudo” field Determination is requested by the
operator and agreed with the DTI, and the relinquishment taken to the nearest
Block Section (1 minute longitude by 1 minute latitude) beyond. The minimum
retention/relinquishment is 2 x 2 Block Sections. However, the DTI may decide
not to accept a relinquishment if it is not considered realistic, in which case the
block will be classified N5 (no exploration area remaining).
6. All other Class B blocks (i.e. those that have not been relinquished or, as a result of
step 4, not been removed from Class B) will be placed on LIFT together with a brief
description of the barriers to activity and links to a DEAL data package. While on the
LIFT site all licensees will use reasonable endeavours(4) both jointly and severally to
reach agreement between themselves or with third parties on activity to move the block
out of the fallow definition.
Class B blocks will, from January 2004, be placed on the DTI website.
Although it is no longer a mandatory part of the process, the Department
recommends the UKLIFT website, managed by IndigoPool, as a good
“shop window” for exhibiting fallow blocks.
7. If, after a period of 9 months, the block remains(5) on LIFT each licensee and third
parties will report to the Department on their firm strategy(6), if any, for removing the
block from the fallow definition and LIFT. Any licensee without a firm strategy at that
time will assign its interest and agreed remaining liabilities to a co-licensee or third
party with a firm strategy if requested by them to do so. Where two or more requests
were made then the choice would be made on normal commercial criteria.
8. If, after a further period of 3 months, a block remains on LIFT (see note 5 below)
then it will be relinquished(7). All blocks relinquished will be offered for re-licensing and
the data relating to them released.
Any Licensee or third party who has approached the existing Licensees with a
plan which is rejected by the existing licensees should approach the DTI. The
Department will consider any plans put forward to assess the viability, then
decide how best to enable the activity(8).
Notes:
1. A block will be assigned an area agreed between the Department and
licensees excluding any field or PRT determinations.
2. Fallow blocks are those where the initial term (normally 6 years) has expired
and there has been no drilling for a period of 4 years and no dedicated seismic
or other significant activity for a period of 2 years. A review of which blocks are
fallow will take place every year. This definition to be reviewed by PILOT after a
period of 2 years, if insufficient activity is being generated then a reduction to
2&1 years respectively would be considered.
Each year the Department will draw up a list of those blocks that it
considers to be newly Fallow, and inform all of the licensees of these
blocks of their possible Fallow class in July. Licensees will not be
required to submit a written response to these classifications. Instead, the
DTI will hold meetings with all licensees in Q3, then issue formal
classifications by the end of September. Blocks classed as (B1 – B7) will
be listed on the DTI website in January of the following year.
The rationale for the amended timetable for Fallow Blocks is to align more
closely the possible relinquishment of blocks with future Licensing
Rounds.
3. A block in which a field has commenced production within the past year, or
where there has been a change of operator in the past year or where there has
been a substantial change of ownership in the past three months will be
considered as Class A. These derogations will only take effect once the
assignment or change of operator have been agreed by the Department.
Moratoria for either Operator or substantial Licensee change (greater than
20%) will only apply to newly Fallow blocks, not to those that have already
entered the Fallow process and been formally classified.
Moratoria will not be given where there has been a change in Operator as
a result of a corporate takeover or merger. The logic behind this is that
the DTI would not like to see evaluations postponed, particularly where
some of the transferred fallow assets may be peripheral to the new
Operator and therefore subject to further transfer. If evaluation were to be
deferred by a year Moratorium, followed by an additional year if the asset
is transferred again, substantial delay would result before any significant
activity was undertaken.
Moratoria will therefore normally only be granted where the change in
Operatorship has been on a block specific or targeted basis and where
the new operator needs time to assess the block. However, if the
personnel working on the assets are not taken over by the new Operator,
a Moratorium may be considered appropriate.
4. Once on the LIFT site licensees will exercise their rights in accordance with
the PILOT Licence-Holder Commercial Code of Practice and pre-emption
agreement. Licensees will not be expected to conclude agreements with third
parties over whom they could demonstrate reasonable concerns as to technical
or financial capacity.
5. A block will cease to be fallow (and will be removed from the LIFT site) at any
time that significant activity has taken place or where there is a firm agreement
that such activity will take place within one year or such time as is reasonable in
the circumstances.
A block that ceases to be Fallow but the activity has not yet taken
place will be reclassified as (A) and removed from the DTI website.
It will only become Not Fallow (NF) for a period of four years once
seismic has been shot or a well drilled. However, if the activity is
not undertaken, the block will be reclassified back to (B) and
immediately placed back on the web site for the remainder of the
twelve month publication period.
6. A firm strategy for activity is one where all the elements of a firm agreement
(see note 5) are in place but for access to some or all of the licence interest
comprising the block.
7. Prior to relinquishment licensees will be obliged to have agreed and made
provision to fully abandoned any wells and remove any suspended wellheads
from the block. This obligation need not take effect immediately if this facilitated
future activity.
8. If it appears to the Department at any time that there is a firm strategy for a
block on LIFT that is not being progressed on a commercial basis then the
Department will consider using its powers under the PSPA to require the
licensees to drill the block or forfeit the licence (or part thereof).
Fallow Blocks Classes
A1
“Doing all that can be expected” is assigned to blocks which have
technical challenges which need a significant breakthrough to progress
exploration (e.g. heavy oil, West of Shetland stranded gas)
A2
“Wells AFE'd” is updated to Not Fallow (N3) for a period of 4 years once
the well has spudded.
A3
“Proprietary Seismic AFE'd” is updated to Not Fallow (N2) for a period of
2 years once acquisition begins.
A4
“Seismic Reprocessing 2 year review” is assigned if a significant
reprocessing program is initiated (usually only a large pre-stack depth migration
would qualify).
A5
“Seismic Reprocessing 1 year review” is assigned when there is
interpretation underway on a new significant reprocessing product delivered
within the last year.
A6
“Infrastructure full or none available” is occasionally assigned when all
the technical work has been completed, but drilling is deferred because
development export routes are currently full or not available.
A7
“FDP in preparation” is updated to Not Fallow (N4) once the FDP is
submitted, and remains not fallow until one year after production begins.
[A8
“Subeconomic” (from class B) is used for fallow discoveries only]
A9
“Median Line issues” is occasionally assigned to blocks that have
commercial or Treaty issues that have delayed exploration.
M
“Moratorium” Moratoria for either Operator or substantial Licensee
change (greater than 20%) will only apply to newly Fallow blocks and not
to those that have already entered the Fallow process and been formally
classified. Moratoria will not normally be given where there has been a
change in Operator as a result of a corporate takeover or merger but only
where the change in Operatorship has been on an asset specific basis.
However, if the personnel working on the assets are not taken over by the
new Operator, a Moratorium may be considered appropriate.
Moratoria will commence from the earliest of either the date of DTI
approval of an asset transfer or the effective date of the transaction.
BH
“Class B Hold” is assigned when an agreed asset transfer could result in
a new Operator, who requires additional time to assess their strategy for activity
on a Class B block. These blocks are held from release onto the website, but
must have a firm programme for activity (supplied within a month of the transfer
by the new Operator) over an agreed time frame with the Department.
When the programme for activity is agreed, the block will be retained as (BH)
until there is a signed AFE for significant activity to take place. Failure to
implement the programme will result in the block being put onto the website
immediately for twelve months.
BR
“Class B Rescued” applies to a block which has already been publicised
on the web, but when an agreed asset transfer could result in a new Operator,
who requires additional time to assess their strategy for activity on a Class B
block. These blocks are removed from the website, but must have a firm
programme for activity (supplied within a month of the transfer by the new
Operator) over an agreed time frame with the Department.
When the programme for activity is agreed, the block will be retained as (BR)
until there is a signed AFE for significant activity to take place. Failure to
implement the programme will result in the block being put onto the website
immediately for the remainder of the twelve month period from the date it was
rescued (BR).
B1
“No activity” is assigned when there is no apparent work being carried
out on a block.
B2
“Low level activity” is assigned when there are ongoing studies but no
significant activity on a block.
B3
“Delayed by partner misalignment” is assigned when a Licensee or the
Operator has proposed a plan for significant activity, but the group has not
approved expenditure.
B4
“Delayed by third party issues” is assigned when the Licensees are in
alignment but there is a commercial obstacle that has delayed activity.
B5
“Delayed by infrastructure issues” is assigned when the Licensees are in
alignment but there are infrastructure related commercial obstacles that have
delayed activity.
B6
“Divestment planned” is assigned when the Operator’s or other partner’s
strategy is to market their interest in the block, which has delayed significant
activity.
B7
“Non-economic accumulation” is assigned when the block has been fully
evaluated, but the Licensees believe it has no economically viable prospectivity.
N1
“Not Fallow - Relinquished” is assigned when a block relinquishment is
updated in the Department Licensing database. A list of relinquished blocks is
regularly updated on the DTI website.
N2
“Not Fallow - New proprietary seismic” is assigned when new proprietary
seismic data has been acquired. This class is in effect for a period of two years
from the date of first acquisition.
N3
“Not Fallow - Well drilled” is assigned when a well testing a prospect on
the subarea of the block is drilled. The block will be Not Fallow for a period of
four years from spud date.
N4
“Not Fallow - FDP or new production” is assigned when the Department
receives a Field Development Plan for a discovery that is on block, and will
remain Not Fallow until a year after first production. If the Field Development
Plan is withdrawn, the block becomes potentially fallow immediately.
N5
“Not Fallow - no exploration area remaining” is assigned when a
determined field or the hydrocarbon accumulation relating to a Fallow Discovery
covers most of the block and no further prospectivity occurs at other geologic
levels.
N6
“Not Fallow - Licence in primary term” is assigned when a previously
fallow block is relinquished and subsequently re-licensed.
R
“Relinquishment notice submitted” is assigned when the Department
receives a request for relinquishment of a block, or occasionally when an
Operator has indicated that a request for relinquishment is in preparation.
Blocks are not given N1 status at this time as the Licensees are at liberty to
withdraw a notice of relinquishment (or amend it) up to a month before the
anniversary date or the date that the DTI has indicated a relinquishment should
be notified.
FALLOW DISCOVERIES PROCESS – CLARIFICATION NOTES
The PILOT initiative for stimulating activity on fallow discoveries was introduced
two years ago. Since then, the Department has made some refinements and
interpretations as they have become necessary to implement the initiative.
This note is intended to clarify the formal process that was announced in March
2002, outlining how the DTI may regard the level of activity on discoveries that
might be considered to be Fallow. It should be noted, however, that this is for
guidance only and that interpretations are made on a case by case basis.
Clarification Notes have been added in highlighted italics to the original PPWG
proposals below.
Note that clarification has also been appended to the Fallow Blocks process,
which is different from that for Fallow Discoveries.
As part of the Treasury Review (Q3 2003), a workgroup was set up to look at
including those discoveries with more than one appraisal well into the process.
It has been agreed that: “The fallow discoveries with more than one associated
appraisal well as of 31st December 2003 should be introduced by the Industry
into the Fallow Discoveries process in a steady progression over the period 2004
to 2006 inclusive. Subsequent discoveries with more than one associated
appraisal well will be incorporated into the Fallow Discoveries process in the
year that they become fallow.”
STIMULATING ACTIVITY ON FALLOW DISCOVERIES
Scheme
1. Drawing on the "fallow discoveries" exercises of the past few years and discussion
with operators and co-licensees* on a case by case basis, the Department will draw up
a list of those discoveries(1) that it considers to be fallow(2). The list will be divided into
two classes:
CLASS (A) Those where the current licensees are doing all that a technically
competent group with full access to funding could reasonably be expected to do(3).
CLASS (B) Those where the current licensees are unable to progress towards
activity due to misalignment within the partnership, a failure to meet economic
criteria, other commercial barriers or a combination of these.
* This will be conducted in the most efficient way possible. It is envisaged that
usually the Department will review by licensee i.e. all fallow discoveries held by
a particular company although for large licence holders the process may be
staged. A licensee may of course choose to be represented on a particular
discovery by a co-licensee.
2. Class (A) discoveries will be reviewed after 2 years. Where a technical barrier to
progress had been identified, the Department may request that a description of the
barrier be communicated to LOGIC/ITF if this is seen as necessary to promote
direction for technical research and development. The Department may also provide a
generic statement of needs to LOGIC/ITF for the same purpose.
3. For Class (B) discoveries, the individual licensees will be formally invited to consider
and report on whether, in their view, activity to take the discovery out of the fallow
definition is feasible and whether a re-allocation of interests would facilitate this.
4. After 3 months, the Department will invite those licensees who do not see a viable
way to progress the discovery either to relinquish that part(4) of the licence containing
the discovery or to assign it together with any remaining liabilities agreed, such as
suspended wells, to those licensees who do. The Department will be willing to subdivide the licence or consider appointing a new operator if this will facilitate activity.
Where there was a clear benefit, the Department would at this stage use its powers
under the licence to require the licensees to proceed with a viable development.
Where a divestment is under serious consideration for an incoming Licensee to
become Operator (e.g. Sale and Purchase Agreement signed) for a discovery
after it has been classed as Fallow (B), a class B Hold (BH) may be assigned if
the discovery has not yet been publicised on the web site, or B Rescued (BR) if it
has already been announced. This would allow time for the transfer to take place
without complication.
Within a month following transfer, the new Operator should provide a
programme of work, not exceeding one year, which must be agreed with the DTI.
The programme must be timed, and lead to definite planned significant activity
on the discovery. On agreement of the programme, the discovery will be retained
as B Hold (BH) or B Rescued (BR) until a commitment is made (i.e. a signed AFE)
to significant activity, when the discovery would be reclassified as (A).
Failure to implement the programme will result in the discovery being released
onto the website immediately for two years if the discovery has not already been
publicised on it, or, for discoveries that have already been publicised on the
website, put back on the website for the remainder of the two year period from
the date it was rescued (BR).
5. All Class B discoveries relinquished as a result of step 4 will be offered for relicensing. Licensees will ensure that released data relating to the discovery will be
made available promptly and listed on DEAL.
Where a block containing a discovery might potentially be relinquished, the
discovery may be retained. A “pseudo” field Determination is requested by the
operator and agreed with the DTI, and the relinquishment taken to the nearest
Block Section (1 minute longitude by 1 minute latitude) beyond. The minimum
retention/relinquishment is 2 x 2 Block Sections. However, the DTI may decide
not to accept a relinquishment if it is not considered realistic, in which case the
block will be classified N5 (no exploration area remaining).
If the discovery in these circumstances is also Fallow, the discovery will be
retained but only for the remainder of the release period, unless no plans are
submitted by a third party and commercial viability has not been established, in
which case it is retained by the original Licensees (see Step 9).
6. All other Class B discoveries (i.e. those that have not been relinquished or, as a
result of step 4, have not moved out of the fallow definition) would be placed on LIFT
together with a brief description of the barriers to activity and links to a DEAL data*
package. Responsibility for the data package would rest with the licensees wishing to
attract a Third Party. Whilst on the LIFT site all licensees will use reasonable
endeavours(5) both jointly and severally to reach agreement between themselves or
with third parties on activity to move the discovery out of the fallow definition.
*A standard "go by" data package is envisaged with data sufficient for a Third
Party to evaluate the discovery provided by whatever means are best.
7. If, after a period of 18 months, the discovery remained(6) on LIFT, the licensees and
any third parties will report to the Department on their firm strategy(7), if any, for
removing the discovery from the fallow definition and LIFT. Any licensee without a firm
strategy at that time will assign its interest (7) and any agreed remaining liabilities to
any co-licensees or third parties with a firm strategy if requested by them to do so.
Where two or more parties are competing for the equity then the choice would be made
on normal commercial criteria.
8. A discovery for which there was a firm strategy proposed and yet which remained on
LIFT for a further period of 6 months without activity, should be relinquished(8). All
discoveries relinquished would be offered for re-licensing and the links to released data
placed on a DEAL linked data site.
9. Where a current licensee or a third party proposed no firm strategy then a
commercial test of the discovery's viability would have been made. In this case the
discovery would be reclassified as Class A, retained by the original licensees and
reviewed after two years.
10. If it appears to the Department at any stage that there is a firm strategy for a
discovery on LIFT that is not being progressed on a commercial basis, then the
Department will consider using its powers under the PSPA to require the licensees to
undertake activity to establish commercial viability or forfeit the licence (or part thereof).
Any Licensee or third party who has approached the existing Licensees with a
plan which is rejected by the existing licensees should approach the DTI. The
Department will consider any plans put forward to assess the viability, then
decide how best to enable the activity.
Notes:
1. A discovery is any well where hydrocarbons were encountered.
Multiple horizons are treated as a single discovery.
2. Fallow discoveries are those where the initial term (normally 6 years) has
expired and there has been no appraisal drilling, dedicated seismic, extended
well testing or similar dedicated activity for a period of 4 years. A review of
which discoveries are fallow will take place every year.
Each year the Department will draw up a list of those discoveries that it
considers to be newly Fallow and inform all of the licensees of these
discoveries of their possible Fallow class in January. Licensees should
provide their response to this classification to the DTI by the end of
March. The DTI will then consider these responses, seeking clarification
with the licensees where necessary, then issue formal classifications by
the end of September.
Discoveries classed as (B1 – B7) by both the licensees and the DTI will be
listed on the DTI website in September. Discoveries classed as (B1 – B7)
by the DTI following clarification with the licensees will be listed on the
DTI website in January of the following year.
3. A Fallow discovery in a block where a field has commenced
production within the past year or where there has been a change of
operator in the past year or where there has been a substantial change
of ownership in the past 3 months, will be temporarily considered as
Class A. These derogations will only take effect once the assignment or
change of operator has been agreed by the Department.
Moratoria for either Operator or substantial Licensee change (greater than
20%) will only apply to newly Fallow discoveries, not to those that have
already entered the Fallow process and been formally classified.
Moratoria will not be given where there has been a change in Operator as
a result of a corporate takeover or merger. The logic behind this is that
the DTI would not like to see evaluations postponed, particularly where
some of the transferred fallow assets may be peripheral to the new
Operator and therefore subject to further transfer. If evaluation were to be
deferred by a year Moratorium, followed by an additional year if the asset
is transferred again, substantial delay would result before any significant
activity was undertaken.
Moratoria will therefore normally only be granted where the change
in Operatorship has been on an asset specific or targeted basis
and where the new operator needs time to assess the discovery.
However, if the personnel working on the assets are not taken over
by the new Operator, a Moratorium may be considered appropriate.
4. An area will be agreed in discussion between the Department and
Licensees that would be likely to encompass any eventual field or PRT
determination.
5. Once on the LIFT site licensees will exercise their rights in
accordance with the PILOT Operators' Code of Practice and preemption agreement. Licensees will not be expected to conclude
agreements with third parties over whom they could demonstrate
reasonable concerns as to technical or financial capacity.
Class B discoveries will, from January 2004, be placed on the DTI
website. Although it is no longer a mandatory part of the process,
the Department recommends the UKLIFT website, managed by
IndigoPool, as a good “shop window” for exhibiting fallow
discoveries
6. A discovery will cease to be fallow (and will be removed from the LIFT
site) at any time that significant activity has taken place or where there is
a firm agreement that such activity will take place within one year.
Where such activity is not a development then for the purpose of review,
the definition of "fallow" will be considered to be a further two years of
inactivity rather than four.
A discovery that ceases to be Fallow but the activity is not a
development will be reclassified as (A) and removed from the DTI
website. Also, when activity on a discovery is agreed with the
Department but has not yet taken place, the discovery will be
reclassified as (A) and removed from the DTI website. However, if
the activity is not undertaken, the discovery will immediately be
placed back on the web site for the remainder of the two year
period.
7. A firm strategy for activity is one where all the elements of a firm
agreement (see note 6) are in place other than those relating to access
to some or all of the licence interest comprising the discovery. A firm
strategy will be deemed by the DTI to be a firm obligation on the parties
to undertake that activity. Assignees will undertake with both the
Department and assignors to return the licence interest to the assignors
in the event that they fail to implement that activity in full within the
period stipulated.
8. Prior to relinquishment licensees would be obliged to agree to fully abandon
any wells and have removed any suspended wellheads by a specified time.
Assignment of these obligations may occur at the time of assignment of equity
in the discovery to co-licensees or third parties.
Fallow Discoveries Classes
A1
“Doing all that can be expected” is assigned to discoveries that have
technical challenges that need a significant breakthrough to progress appraisal
or development (e.g. heavy oil, HPHT, West of Shetland stranded gas.)
A2
“Wells AFE'd” is assigned when there is a firm plan for a well on the
discovery, with the effective date being the date on which the AFE for the well
was signed.
A3
“Proprietary Seismic AFE'd” is assigned when there is a firm plan for
proprietary seismic over the discovery, with the effective date being the date of
acquisition of the seismic.
A4
“Seismic Reprocessing 2 year review” is assigned if a significant
reprocessing effort is initiated to delineate the discovery (usually only a large
Pre-stack depth migrations). The effective date of the classification being the
date of receipt of the seismic data for reprocessing.
A5
“Seismic Reprocessing 1 year review” is assigned when there has been a
new significant reprocessing product to delineate the discovery delivered within
the last year. The effective date of the classification being the date of receipt of
the seismic data for reprocessing.
A6
“Infrastructure full or none available” is assigned when all the technical
work has been completed, but appraisal drilling or development is deferred
because export routes are currently full or not available.
A7
“FDP in preparation” is assigned where a development plan for a
discovery is in preparation with the effective date being the date of receipt by the
DTI of the development plan.
A8
“Subeconomic” (from class B) is used for fallow discoveries for which no
firm strategy has been proposed to develop or appraise after they have been
published for a period of 18 months and where an economic test has not
established commercial viability. These discoveries will be reviewed again after
two years.
A9
“Median Line issues” is occasionally assigned to discoveries that have
commercial or Treaty issues that have delayed appraisal or development activity.
M
“Moratorium” Moratoria for either Operator or substantial Licensee
change (greater than 20%) will only apply to newly Fallow discoveries and
not to those that have already entered the Fallow process and been
formally classified. Moratoria will not normally be given where there has
been a change in Operator as a result of a corporate takeover or merger
but only where the change in Operatorship has been on an asset specific
basis. However, if the personnel working on the assets are not taken over
by the new Operator, a Moratorium may be considered appropriate.
Moratoria will commence from the earliest of either the date of DTI
approval of an asset transfer or the effective date of the transaction.
BH
“Class B Hold” is assigned when an agreed asset transfer could result in
a new Operator, who requires additional time to assess their strategy for activity
on a Class B discovery. These discoveries are held from release onto the
website, but must have a firm programme for activity (supplied within a month of
the transfer by the new Operator) over an agreed time frame with the
Department.
When the programme for activity is agreed, the discovery will be retained as (BH)
until there is a signed AFE for significant activity to take place. Failure to
implement the programme will result in the discovery being put onto the website
immediately for two years.
BR
“Class B Rescued” applies to a discovery which has already been
publicised on the web, but when an agreed asset transfer could result in a new
Operator, who requires additional time to assess their strategy for activity on a
Class B discovery. These discoveries are removed from the website, but must
have a firm programme for activity (supplied within a month of the transfer by
the new Operator) over an agreed time frame with the Department.
When the programme for activity is agreed, the discovery will be retained as (BR)
until there is a signed AFE for significant activity to take place. Failure to
implement the programme will result in the discovery being put onto the website
immediately for the remainder of the two year period from the date it was given
(BR) status.
B1
“No activity” is assigned when there is no apparent work being carried
out on a discovery.
B2
“Low level activity” is assigned when there are ongoing studies but no
significant activity on a discovery.
B3
“Delayed by partner misalignment” is assigned when a Licensee or the
Operator has proposed a plan for significant activity, but the group has not
approved expenditure.
B4
“Delayed by third party issues” is assigned when the Licensees are in
alignment but there is a commercial obstacle that has delayed activity.
B5
“Delayed by infrastructure issues” is assigned when the Licensees are in
alignment but there are infrastructure related commercial obstacles that have
delayed activity.
B6
“Divestment planned” is assigned when the Operator’s or other licensee’s
strategy to market their interest in the discovery has delayed appraisal or
development.
B7
“Non-economic accumulation” is assigned when the discovery has been
fully evaluated, but the Licensees believe it has no economically viable
prospectivity.
N1
“Not Fallow - Relinquished” is assigned when a discovery is located on a
block that has been relinquishment and is updated in the Department Licensing
database. The list of relinquished blocks is updated regularly on the DTI website.
N2
“Not Fallow - New proprietary seismic” is assigned when new proprietary
seismic data appraising the discovery has been acquired. This class is not used
for Fallow B discoveries that have been published; instead these are placed in
class A3 for a period of two years from the date the acquisition began.
N3
“Not Fallow - Well drilled” is assigned when a well appraising the
discovery is drilled. The discovery will be not fallow for a period of four years
from spud date. This class is not used for Fallow B discoveries that have been
published; instead these are placed in class A2 for a period of two years from the
spud date.
N4
“Not Fallow - FDP or new production” is assigned when the Department
receives a Field Development Plan for a discovery. This class is not used for
Fallow B discoveries that have been posted on the website; instead these are
placed in class A7 for a period of two years from the date of receipt of the Field
Development Plan. If the Field Development Plan is withdrawn, the discovery
becomes potentially fallow immediately.
[N5
“Not Fallow - limited exploration area” is only used for fallow blocks.]
N6
“Not Fallow - Licence in primary term” is assigned when a previously
fallow discovery is relinquished and the block is subsequently re-licensed.
R
“Relinquishment notice submitted” is assigned when the Department
receives a request for relinquishment of the block containing the discovery, or
occasionally when an Operator has indicated that a request for relinquishment is
in preparation. Discoveries are not given N1 status at this time as the Licensees
are at liberty to withdraw a notice of relinquishment (or amend it) up to a month
before the anniversary date or the date that the DTI has indicated a
relinquishment should be notified.