(MENAFN- ProactiveInvestors)
Ireland could very soon be revealed as one of the rare places that major oil companies are still willing to explore.
This assertion may seem a little improbable especially as it comes at a time when crude is priced at its lowest in over a decade and much of the international exploration sector currently looks like a write-off.
But imminent new offshore licence awards may see sceptics revisit old assumptions about Ireland’s oil industry which is famed for failing to deliver on its supposedly great potential.
Tales of Ireland’s untapped oil potential have been well worn. And admittedly a revival story tends to come around every few years only to disappoint.
As Britain’s North Sea industry boomed (and more recently bust) Ireland’s offshore oil business stalled. Low oil prices now mean large parts of the North Sea face possible shut-downs and mass job losses have already been announced.
Meanwhile if the rumours are true some of the world’s biggest oil companies are set to start a new phase of investment into Irish waters. Sentiments in Aberdeen and Dublin are worlds apart according to anecdotal accounts which describe an emerginging sector buoyed by activity and promise in the Irish capital.
This is probably where comparisons to Britain’s oil business should stop. The new examples to follow are now much further away on the other side of the Atlantic.
We’ll come back to this shortly.
Ireland’s Petroleum Affairs Division in September closed the books on the country’s most successful offshore licensing round. A total of 43 licence applications were submitted by oil companies to the Irish government and it is understood that much of the new acreage garnered multiple competing bids.
Reports suggest the list of applicants included some very large players (uncorroborated name checks included the likes of ExxonMobil and China’s ).
Oil companies were advised last year by the Irish authorities that the first wave of new licence awards would be announced in February. Though it remains to be seen whether or not Ireland’s general election which takes place on February 26 affects the timeline.
Nevertheless the outcome will soon be known.
The recent surge in interest is in stark contrast to the previous round in 2011 in which quoted Providence Resource led a group of explorers that proved to be the only applicants.
A number of recent exploration successes offshore Canada sparked this new interest.
Discoveries on the other side of the Atlantic are believed to be geologically similar to those off Ireland’s west coast - as hundreds of millions of years ago before the continents separated they would have been located reasonably close together.
Canada recently completed its own licensing round in November and through that process major oil companies committed to investing some US$1.2bn into new exploration work; so the interest is tangibly significant.
In Irish waters so far the stand-out successes have yet to materialise though an Exxon and well did in 2013 encounter an oil column which thus confirmed an active petroleum system in the region.
Should a future success match up to the apparent analogies in Canada it would confirm a whole new approach to exploring Irish projects in the future.
John O’Sullivan technical director explained recently that the geological approach in the past of trying to transpose the blueprint of the North Sea into Ireland has never really worked.
“We were trying to hammer a square peg into a round hole” he said.
“We (in Ireland) drilled wells they didn’t work and everybody got annoyed.”
“I think this new paradigm where people are not transposing from east to west but transposing from west to east by looking at the Canadian margin and extending that play that’s the real opportunity.”
Providence already had its ear close to the ground regardless of the licensing as it has been talking with potential new partners for existing ventures in the region.
O’Sullivan highlighting the increased interest seen in Providence’s assets added: “this is an opportunity in a fiscally stable English speaking northwest European country and it is an oil province rather than gas.”
“It is good for Ireland even though these are dreadful times for the oil industry generally.”
Although confidence in Ireland’s currently small oil and gas industry has been tested to breaking point in the past the recent and overdue completion of Shell’s Corrib gas development may provide some long awaited encouragement.
But as far as confidence in the offshore exploration story goes it is likely that many will feel the need to see it to believe it. The upcoming licence awards may well prove to be the first step.
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