Oil & Gas Licensing Round Applications in Cardigan Bay

It has been reported in the media that three companies have recently applied for licences to explore Cardigan Bay for oil and gas reserves.  This is incorrect. In the 24th offshore licensing round, which extends to all UK licensable areas around the UK, DTI has received a single application from two companies for three blocks in the Cardigan Bay area (a “block” being an area of around 250km2).  

As is routine in a Licensing Round, the application includes a proposed Work Programme. In this case it is a Drill-or-Drop programme, which means that while there is no commitment to drill a well, the licence will expire after four years if no well has been drilled. The Work Programme includes the acquisition and review of existing seismic data but not the shooting of any new seismic surveys. DTI will announce the results of the Licensing Round in the autumn.

If there is a discovery, within the four year period,  the applicant will have a further four  years to submit a development plan to DTI for approval.  If approved an eighteen year production period, which could be extended, would follow.

Any licensee proposing to carry out any seismic surveys or drilling under the licence requires permission, and the UK Government would consider its application in light of a range of environmental protection provisions, including the Habitats Directive, the Birds Directive and the Environmental Impact Assessment Directive. This will include a full consultation and the Welsh Assembly Government will be a consultee.  

In commenting to DTI earlier this year on the Strategic Environmental Assessment 6 Environmental Report Consultation, the Joint Nature Conservation Committee, which comprises Countryside Council for Wales and its counterpart organisation from around the UK, made clear that individual project consenting provided adequate environmental protection for the Cardigan Bay area, so that no blocks needed to be excluded from the Licensing Round. The Welsh Assembly Government supports this position.
 
The west coast of Wales has a number of European Natura 2000 Marine sites protected under the Habitats and the Wild Birds Directives. The closest of these to the three blocks for which a licence has been applied for is Cardigan Bay Special Area of Conservation (SAC).

Cardigan Bay has been designated as a SAC for features that include bottlenose dolphin.  It is one of two main areas in the UK where bottlenose dolphins are semi-resident. The site also contains other important European habitats (sandbanks, reefs and sea caves) and species (lamprey and grey seal). This Bay is considered to be an outstanding and internationally important marine environment, as it supports such a rich variety of marine animals and plants.

Any project which is likely to have an impact on European protected species and habitats will be subject to appropriate assessment of its implications for the site in view of the site's conservation objectives. This must be carried out before any work can begin, and under the guidance of the Countryside Council for Wales. For blocks that are outside the boundaries of these sites, an environmental assessment will still be needed to consider whether there is likely to be any effect on the Natura 2000 sites in the area.

All of the 3 blocks are partially within/adjacent to European SACs.  DTI will be carrying out Strategic Environmental Assessments under the relevant European Directive, as well as Appropriate Assessments under the Habitats and Birds Directive. They are shortly to commence an Appropriate Assessment of the 24th Licensing Round. This will specifically consider whether areas protected under the Habitats and Birds Directive have the potential to be impacted by future oil or gas exploration or development.

Oil and gas are valuable resources for the Welsh and UK economy - but looking for it or extracting it must be done carefully, in order to minimise disruption to the environment.  Strict environmental checks on activities apply at every stage.