The Licensing System

Abstract

The role of government has been, and will continue to be, critical in determining the pace of onshore oil and gas exploration and production. At all times, its influence has been felt indirectly, with greater or lesser intensity, as the industry adjusts to changes in the broader legislative, economic and fiscal climate over which governments have considerable control. At other times that influence has been far more direct. For example, the first drilling campaign and the rapid build-up of production during the Second World War occurred largely as a result of government-sponsored initiatives. This chapter looks at another example of government action that affects both the day-to-day activities of individual companies and the long-term future of the industry as a whole: the development, operation and effects of the system of licensing through which all exploration and production activity on the British mainland is regulated. The system has been criticised both in its detail and its application, and it is probably fair to say that while the present system is clearly workable — if not entirely satisfactory to most parties — the number of changes it has undergone in recent years reflects the difficulty successive governments have had in balancing a number of, often conflicting, forces. Of growing importance in recent years has been the desire to protect the environment while recognising the need to meet the energy requirements of the nation. During the 1970s this became a crucial issue, although in the early years of exploration, too, a balance had somehow to be struck between the ambitions of the oil companies and the claims of other land-users, be they coal owners, farmers or members of the public in pursuit of recreation and solitude. In the 1970s, too, the issue of licences has been complicated by the desire of government to reconcile private enterprise operations with a measure of state involvement.