ATPG » Topics » North Sea

These excerpts taken from the ATPG 10-K filed Mar 13, 2009.

North Sea

Our properties in the U.K. sector represent virtually all of our total proved reserves in the North Sea. Related government regulations in the U.K. are discussed below.

Regulation of Natural Gas and Oil Production. Pursuant to the Petroleum Act 1998, all natural gas and oil reserves contained in properties located in the U.K. are the property of the U.K. government. The development and production of natural gas and oil reserves in the U.K. Sector - North Sea requires a petroleum production license granted by the U.K. government. Prior to developing a field, we are required to obtain from the Secretary of State for Energy and Climate (the “Secretary of State”) a consent to commence field development. We would be required to obtain the consent of the Secretary of State prior to transferring an interest in a license.

The terms of U.K. petroleum production licenses are based on model license clauses applicable at the time of issuance of the license. Licenses frequently contain regulatory provisions governing matters such as working method, pollution and training, and reserve to the Secretary of State the power to direct some of the licensee’s activities. For example, a licensee may be precluded from carrying out development or production activities other than with the consent of the Secretary of State or in accordance with a development plan which the Secretary of State has approved. Breach of these requirements may result in the revocation of the license. In addition, licenses may require payment of fees and royalties on production and also impose certain other duties.

 

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Table of Contents
Index to Financial Statements

Our operations in the U.K. are subject to the Petroleum Act 1998, which imposes a health and safety regime on offshore natural gas and oil production activities. The Petroleum Act 1998 also regulates the abandonment of facilities by licensees. In addition, the Mineral Workings (Offshore Installations) Act provides a framework in which the government can impose additional regulations relating to health and safety. Since its enactment, a number of regulations have been promulgated relating to offshore construction and operation of offshore production facilities. Health and safety offshore is further governed by the Health and Safety at Work Act 1974 and applicable regulations.

Environmental Regulations. Our operations are subject to environmental laws and regulations imposed by both the European Union and the U.K. government. The offshore industry in the U.K. is regulated with regard to the environment before and during the conduct of exploration and production activities. The licensing regime seeks to employ a preventive and precautionary approach. This is evident in the consultation which takes place before a U.K. licensing round begins, whereby the Secretary of State, acting through the Department of Energy and Climate Change, will consult with various public bodies having responsibility for the environment. Applicants for production licenses are required to submit a statement of the general environmental policy of the operator in respect of the contemplated license activities and a summary of its management systems for implementation of that policy and how those systems will be applied to the proposed work program. In addition, the Offshore Petroleum Production and Pipe-lines (Assessment of Environmental Effects) Regulations 1999, require the Secretary of State to exercise his licensing powers under the Petroleum Act 1998 in such a way to ensure that an environmental assessment is undertaken and considered before consent is given to certain projects.

Petroleum production licenses require the prior approval of the Secretary of State of a licensee to act as operator. The operator under a license organizes or supervises all or any of the development and production operations of natural gas and oil properties subject thereto. As an operator, we may obtain operational services from third parties, but will remain fully responsible for the operations as if we conduct them ourselves.

Pipelines and Transportation. Our operations in the U.K. may entail the construction of offshore pipelines, which are subject to the provisions of the Petroleum Act 1998 and other legislation. The Petroleum Act 1998 requires a license to construct and operate a pipeline in U.K. North Sea, including its continental shelf. Easements to permit the laying of pipelines must be obtained from the Crown Estate Commissioners prior to their construction. We plan to use capacity in existing offshore pipelines in order to transport our gas. However, access to the pipelines of a third party would need to be obtained on a negotiated basis, and there is no assurance that we can obtain access to existing pipelines or, if access is obtained, it may only be on terms that are not favorable to us.

The natural gas we produce may be transported through the U.K.’s onshore national gas transmission system, or NTS. The NTS is owned by a licensed gas transporter, National Grid Gas plc (“National Grid”). The terms on which National Grid must transport gas are governed by the Gas Acts of 1986 and 1995, the gas transporter’s license issued to National Grid under those Acts and a network code. For us to use the NTS, we must obtain a shipper’s license under the Gas Acts and arrange to have gas transported by National Grid within the NTS. We will therefore be subject to the network code, which imposes obligations to payment, gas flow nominations, capacity booking and system imbalance. Applying for and complying with a shipper’s license, and acting as a gas shipper, is expensive and administratively burdensome. Alternatively, we may sell natural gas “at the beach” before it enters the NTS or arrange with an existing gas shipper to ship the gas through the NTS on our behalf.

North Sea

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Our properties in the U.K. sector represent virtually all of our total proved reserves in the North Sea. Related government regulations in the U.K. are
discussed below.

Regulation of Natural Gas and Oil Production. Pursuant to the Petroleum Act 1998, all natural gas and oil reserves
contained in properties located in the U.K. are the property of the U.K. government. The development and production of natural gas and oil reserves in the U.K. Sector - North Sea requires a petroleum production license granted by the U.K.
government. Prior to developing a field, we are required to obtain from the Secretary of State for Energy and Climate (the “Secretary of State”) a consent to commence field development. We would be required to obtain the consent of the
Secretary of State prior to transferring an interest in a license.

The terms of U.K. petroleum production licenses are based on model
license clauses applicable at the time of issuance of the license. Licenses frequently contain regulatory provisions governing matters such as working method, pollution and training, and reserve to the Secretary of State the power to direct some of
the licensee’s activities. For example, a licensee may be precluded from carrying out development or production activities other than with the consent of the Secretary of State or in accordance with a development plan which the Secretary of
State has approved. Breach of these requirements may result in the revocation of the license. In addition, licenses may require payment of fees and royalties on production and also impose certain other duties.

STYLE="margin-top:0px;margin-bottom:0px"> 


11







Table of Contents


Index to Financial Statements


Our operations in the U.K. are subject to the Petroleum Act 1998, which imposes a health and safety
regime on offshore natural gas and oil production activities. The Petroleum Act 1998 also regulates the abandonment of facilities by licensees. In addition, the Mineral Workings (Offshore Installations) Act provides a framework in which the
government can impose additional regulations relating to health and safety. Since its enactment, a number of regulations have been promulgated relating to offshore construction and operation of offshore production facilities. Health and safety
offshore is further governed by the Health and Safety at Work Act 1974 and applicable regulations.

Environmental Regulations. Our
operations are subject to environmental laws and regulations imposed by both the European Union and the U.K. government. The offshore industry in the U.K. is regulated with regard to the environment before and during the conduct of exploration and
production activities. The licensing regime seeks to employ a preventive and precautionary approach. This is evident in the consultation which takes place before a U.K. licensing round begins, whereby the Secretary of State, acting through the
Department of Energy and Climate Change, will consult with various public bodies having responsibility for the environment. Applicants for production licenses are required to submit a statement of the general environmental policy of the operator in
respect of the contemplated license activities and a summary of its management systems for implementation of that policy and how those systems will be applied to the proposed work program. In addition, the Offshore Petroleum Production and
Pipe-lines (Assessment of Environmental Effects) Regulations 1999, require the Secretary of State to exercise his licensing powers under the Petroleum Act 1998 in such a way to ensure that an environmental assessment is undertaken and considered
before consent is given to certain projects.

Petroleum production licenses require the prior approval of the Secretary of State of a
licensee to act as operator. The operator under a license organizes or supervises all or any of the development and production operations of natural gas and oil properties subject thereto. As an operator, we may obtain operational services from
third parties, but will remain fully responsible for the operations as if we conduct them ourselves.

Pipelines and Transportation.
Our operations in the U.K. may entail the construction of offshore pipelines, which are subject to the provisions of the Petroleum Act 1998 and other legislation. The Petroleum Act 1998 requires a license to construct and operate a pipeline in U.K.
North Sea, including its continental shelf. Easements to permit the laying of pipelines must be obtained from the Crown Estate Commissioners prior to their construction. We plan to use capacity in existing offshore pipelines in order to transport
our gas. However, access to the pipelines of a third party would need to be obtained on a negotiated basis, and there is no assurance that we can obtain access to existing pipelines or, if access is obtained, it may only be on terms that are not
favorable to us.

The natural gas we produce may be transported through the U.K.’s onshore national gas transmission system, or NTS.
The NTS is owned by a licensed gas transporter, National Grid Gas plc (“National Grid”). The terms on which National Grid must transport gas are governed by the Gas Acts of 1986 and 1995, the gas transporter’s license issued to
National Grid under those Acts and a network code. For us to use the NTS, we must obtain a shipper’s license under the Gas Acts and arrange to have gas transported by National Grid within the NTS. We will therefore be subject to the network
code, which imposes obligations to payment, gas flow nominations, capacity booking and system imbalance. Applying for and complying with a shipper’s license, and acting as a gas shipper, is expensive and administratively burdensome.
Alternatively, we may sell natural gas “at the beach” before it enters the NTS or arrange with an existing gas shipper to ship the gas through the NTS on our behalf.

FACE="Times New Roman" SIZE="2">Compliance

We believe that our operations in the Gulf of Mexico and North Sea are in substantial
compliance with current applicable laws and regulations. While we expect that continued compliance with existing requirements will not have a material adverse impact on us, there is no assurance that this will continue.

STYLE="margin-top:18px;margin-bottom:0px">Employees

At December 31, 2008 we had 53
full-time employees in our Houston office, 8 full-time employees in our U.K. office and 2 full-time employees in our Netherlands office. None of our employees is covered by a collective bargaining agreement. We regularly use the services of
independent consultants and contractors to perform various professional services, particularly in the areas of construction, design, well-site supervision, permitting and environmental assessment. Independent contractors usually perform field and
on-site production operation services for us, including gauging, maintenance, dispatching, inspection and well testing.

 


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Table of Contents


Index to Financial Statements


North Sea

Acquisitions – In the U.K. Sector of the North Sea, we were preliminarily awarded Block 9/21a by the Department of Energy and Climate Change (DECC). Block 9/21a contains a heavy oil discovery and is located in the northern North Sea approximately 100 kilometers south of our Cheviot property. ATP applied for this block in the 25th U.K. Licensing Round and, if we are awarded the lease by the DECC, there will not be a license fee at inception of the license. We will be operator with a 50% working interest.

Development – In the North Sea, we began drilling one development well in the fourth quarter of 2008 which was still being drilled at December 31, 2008. This well was put on production in March 2009. In December 2008, we sold 80% of our working interest in Wenlock and Tors. We operate Wenlock and Tors with a 20% and 17% working interest, respectively.

These excerpts taken from the ATPG 10-K filed Mar 7, 2008.

North Sea

During the fourth quarter of 2006, we acquired a 100% working interest in Block 49/12b in the Southern Gas Basin of the U.K. North Sea. Block 49/12b is an exploratory opportunity offsetting our Wenlock development.

North Sea

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">During the fourth quarter of 2006, we acquired a 100% working interest in Block 49/12b in the Southern Gas Basin of the U.K. North Sea. Block 49/12b is an
exploratory opportunity offsetting our Wenlock development.

This excerpt taken from the ATPG 10-K filed Mar 2, 2007.

North Sea

Acquisitions—Wenlock – During the fourth quarter of 2006, our wholly-owned subsidiary, ATP Oil & Gas (UK) Limited, or “ATP (UK),” acquired a 100% working interest in Block 49/12b in the Southern Gas Basin of the U.K. North Sea. Block 49/12b is an exploratory opportunity offsetting our Wenlock development. Wenlock is located in 75 feet of water and has been defined by two vertical wells that have tested at rates of 35 MMcf per day and 74 MMcf per day, respectively.

Development—Tors (Kilmar and Garrow) – During 2006, we drilled and placed on production two wells at Kilmar and at December 31, 2006 were drilling a third well at Tors in the Garrow reservoir. This well was completed and placed on production during February 2007. Previously in 2006, we completed the installation of the platform at Garrow and connected the 23-kilometer pipeline from Garrow to Kilmar. During 2006, we increased North Sea production by 10.9 Bcfe to 12.2 Bcfe, primarily due to the new production from Tors field, which we operate with an 85% working interest.

L-06d—On February 27, 2006, we announced first production at L-06d in the Dutch North Sea. With that achievement, ATP recorded flowing production in all three of its core areas: the U.S. Gulf of Mexico, the U.K. North Sea, and Dutch North Sea. ATP operates L-06d with a 50% working interest.

This excerpt taken from the ATPG 10-K filed Mar 15, 2006.

North Sea

Tors - ATP increased its net working interest ownership to 85% in the Tors fields, Garrow and Kilmar, through two separate transactions. First, ATP Oil & Gas (UK) Limited, a wholly-owned subsidiary, acquired a 25% working interest ownership from its partner in the second quarter 2005, and then sold a 15% working interest ownership to a new partner in the fourth quarter 2005. This purchase and sale allowed ATP to reduce its capital exposure and lower its development cost per Mcfe, with the net result of improving the overall return for the project and our shareholders.

Venture – During the fourth quarter of 2005, our wholly-owned subsidiary, ATP Oil & Gas (UK) Limited, increased its working interest ownership to 100% in the Venture field (Block 49/12a North) in the Southern Gas Basin of the U.K. North Sea. The Venture field is located in 75’ of water and has been defined by two vertical wells that have tested at rates of 35 MMcf per day and 74 MMcf per day. Development plans in 2006 include the design and construction of a production platform, the installation of a pipeline to an offset host platform, and the drilling of one well. Planned production is for the first half of 2007.

This excerpt taken from the ATPG 10-K filed Oct 28, 2005.

North Sea

 

Regulation of Natural Gas and Oil Production. Pursuant to the Petroleum Act 1998, all natural gas and oil reserves contained in properties located in the U.K. are the property of the U.K. government. The development and production of natural gas and oil reserves in the U.K. Sector - North Sea requires a petroleum production license granted by the U.K. government. Prior to developing a field, we are required to obtain from the Secretary of State for Trade and Industry (the “Secretary of State”) a consent to develop that field. We would be required to obtain the consent of the Secretary of State prior to transferring an interest in a license.


The terms of the U.K. petroleum production licenses are based on model license clauses applicable at the time of the issuance of the license. Licenses frequently contain regulatory provisions governing matters such as working method, pollution and training, and reserve to the Secretary of State the power to direct some of the licensee’s activities. For example, a licensee may be precluded from carrying out development or production activities other than with the consent of the Secretary of State or in accordance with a development plan which the Secretary of State for Trade and Industry has approved. Breach of these requirements may result in the revocation of the license. In addition, licenses that we acquire may require us to pay fees and royalties on production and also impose certain other duties on us.

 

Our operations in the U.K. are subject to the Petroleum Act 1998, which imposes a health and safety regime on offshore natural gas and oil production activities. The Petroleum Act 1998 also regulates the abandonment of facilities by licensees. In addition, the Mineral Workings (Offshore Installations) Act provides a framework in which the government can impose additional regulations relating to health and safety. Since its enactment, a number of regulations have been promulgated relating to offshore construction and operation of offshore production facilities. Health and safety offshore is further governed by the Health and Safety at Work Act 1974 and applicable regulations.

 

Our operations are also subject to environmental laws and regulations imposed by both the European Union and the U.K. government. The offshore industry in the U.K. is regulated with regard to the environment both before activity commences and during the conduct of exploration and production activities. The licensing regime seeks to employ a preventive and precautionary approach. This is evident in the consultation which takes place before a U.K. licensing round begins, whereby the Secretary of State, acting through the Department of Trade and Industry (“DTI”), will consult with various public bodies having responsibility for the environment. Applicants for production licenses are required to submit a statement of the general environmental policy of the operator in respect of the contemplated license activities and a summary of its management systems for implementation of that policy and how those systems will be applied to the proposed work program. In addition, the Offshore Petroleum Production and Pipe-lines (Assessment of Environmental Effects) Regulations 1999, require the Secretary of State to exercise his licensing powers under the Petroleum Act 1998 in such a way to ensure that an environmental assessment is undertaken and considered before consent is given to certain projects.

 

We believe that our operations in the North Sea are in substantial compliance with current applicable environmental laws and regulations. While we expect that continued compliance with existing environmental requirements will not have a material adverse impact on us, there is no assurance that this trend will continue in the future.

 

Petroleum production licenses require the prior approval of the Secretary of State of a licensee to act as operator. The operator under a license organizes or supervises all or any of the development and production operations of natural gas and oil properties subject thereto. As an operator, we may obtain operational services from third parties, but will remain fully responsible for the operations as if we conduct them ourselves.

 

Our operations in the U.K. may entail the construction of offshore pipelines, which are subject to the provisions of the Petroleum Act 1998 and other legislation. The Petroleum Act 1998 requires a license to construct and operate a pipeline in U.K. North Sea, including its continental shelf. Easements to permit the laying of pipelines must be obtained from the Crown Estate Commissioners prior to their construction. We plan to use capacity in existing offshore pipelines in order to transport our gas. However, access to the pipelines of a third party would need to be obtained on a negotiated basis, and there is no assurance that we can obtain access to existing pipelines or, if access is obtained, it may only be on terms that are not favorable to us.


The natural gas we produce may be transported through the U.K.’s onshore national gas transmission system, or NTS. The NTS is owned by a licensed gas transporter, BG Transco plc (“Transco”). The terms on which Transco must transport gas are governed by the Gas Acts of 1986 and 1995, the gas transporter’s license issued to Transco under those Acts and a network code. For us to use the NTS, we must obtain a shipper’s license under the Gas Acts and arrange to have gas transported by Transco within the NTS. We will therefore be subject to the network code, which imposes obligations to payment, gas flow nominations, capacity booking and system imbalance. Applying for and complying with a shipper’s license, and acting as a gas shipper, is expensive and administratively burdensome. Alternatively, we may sell natural gas ‘at the beach’ before it enters the NTS or arrange with an existing gas shipper for them to ship the gas through the NTS on our behalf.

 

This excerpt taken from the ATPG 10-K filed Mar 31, 2005.

North Sea

 

In January 2004, we completed a successful sidetrack of the Helvellyn well and on February 10, 2004, the well was placed on production. In February 2004, we were awarded Blocks 2/10b and 3/11b by the U.K. Department of Trade and Industry (“DTI”) and in an out-of-round award, we were awarded a third block, Block 2/15a. These three blocks comprise the Cheviot field, which contain several undeveloped oil and gas discoveries and additional upside potential. We received a 100% working interest and are the operator of the field.

 

"North Sea" elsewhere:

Talisman Energy (TLM)
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