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Onshore licences
The duration of an onshore exploration and development
licence is split into successive periods of six, five and 20 years.
The licensee must complete the agreed exploratory work
programme in the initial term before advancing to the second term.
A development plan must then be approved during the second term
before progressing to the third production term. In addition, the
Fallow Initiative may apply to certain blocks and discoveries under
a licence. Blocks and discoveries are considered fallow after three
years if there has been no significant activity such as appraisal
drilling, dedicated seismic acquisition or extended well testing.
Ultimately, fallow blocks and discoveries, if not „rescued‟, will be
re-licensed.
For offshore production, how far seaward does the
regulatory regime extend!
The regulatory regime extends to the UK‟s territorial seas
and the UKCS. The UK territorial sea extends from the low water
mark (established by the Territorial Waters Order 1964) for 12
nautical miles. The designated area of the UKCS has been
redefined over the years through a series of designations under the
Continental Shelf Act 1964, following boundary agreements with
neighbouring states. The Continental Shelf (Designation of Areas)
(Consolidation) Order 2000 consolidated all previous designated
UKCS boundaries. Recently, the Continental Shelf (Designation of
Areas) Order 2001 designated the continental shelf in the Irish Sea
as an area in which the UK may exercise its rights.
Is there a difference between the onshore and offshore
regimes!
Is there a difference between the regimes governing
rights to explore for or produce different hydrocarbons? The
onshore and offshore regimes are historically similar, although
there are distinctions in the means of designating licence areas.
Offshore uses a „grid system‟ for the designation (quadrants of 1
degree latitude by 1 degree longitude, split into „blocks‟ of 25km

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