A company has applied for a licence to look for oil and gas off the West Wales coast, the Department of Trade and Industry (DTI) said today.
It is seeking permission to drill an exploratory well in Cardigan Bay and to look at data covering three 250 square km zones north of Fishguard and Cardigan. It is not proposing to launch seismic vessels of its own to collect new data.
The DTI said "commercial reasons" meant it could not disclose the identity of the applicant.
The area is an important habitat for dolphins and there are concerns that drilling could threaten wildlife if given the go-ahead.
A DTI spokeswoman said: "Drilling and production consents would not be part of a licence award, and are given separately at a later stage, following further environmental scrutiny."
She said there are already 10 wells in the area, although none are currently being worked.
"Oil and gas are valuable resources for the Welsh and UK economy undefined but looking for it or extracting it must be done carefully, so as to minimise disruption to the environment," she added.
"Strict environmental checks on company activity apply at every stage."
More than 120 companies sought exploration licences around the UK when the DTI closed applications on Friday.
It is expected to announce successful applications in the autumn. Licence holders then have four years to look for oil and gas.
Liberal Democrat MP for Ceredigion Mark Williams told the BBC that drilling could cause "enormous environmental damage".
"If the Government gives the green light to these projects it could lead to major industrial exploration in one of the most precious parts of the Welsh coastline," he said.
In the Welsh Assembly opposition AMs said decisions on licensing should be taken in Wales.
Plaid Cymru AM Elin Jones said: undefinedThe dolphin and porpoise populations are long-standing inhabitants of Cardigan Bay and their presence should not be jeopardised by any company seeking to make a short term commercial profit.
undefinedIt should also be the case that the National Assembly should be the appropriate licensing authority for Welsh seas.undefined
Liberal Democrat AM Peter Black said: undefinedI believe and my party believes we should be having a debate or a statement on that as a way to put pressure on the Westminster government and have an Assembly view of this matter before itundefineds too late.undefined