To decide who drills where in the UK, the Department of Energy and Climate Change is divided into a network of blocks. Initial block licenses last for six years – enough time, according to DECC, for the developer to get planning permissions, work out the viability of the area.
These Petroleum Exploration and Development Licenses (PEDL) are assigned in rounds. The latest, in 2008, was the 13th round. DECC is currently considering when the 14th round will be.
Since licensing began, more than 2000 onshore wells have been licensed and drilled in the UK.
As you can see from the licensing map these licenses have various names. Prior to 1984 licenses issued were either called XLs (Exploration Licenses), or PLs (Production Licenses), After 1984 they a new system was introduced: onshore drill sites began to be called either Exploration Licences (EXL), Appraisal Licences (AL) or Development Licences (DL).
Today, those that have not expired retain the same names. Since 1996, however, new licensesare named PEDLs. Thus the name of the block reveals it’s age, and how long it’s been drilled for.
Each licence carries an annual rental and are valid for a sequence of terms. These terms are designed to follow the typical lifecycle of a field: exploration, appraisal, production. The first term is for six years, the second for five years and the third for 20 years. Whether or not it’s relevant to Shale Gas, where exploration to production cycles have typically been very short, remains open to question.