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Ireland’s new licensing may be a bright spot for explorers
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15:11 10 Feb 2016

Are the world’s biggest oil companies about to invest offshore Ireland?
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 CNOOC).

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 AIM 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 Providence Resources 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, Providence Resources 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.

Jamie Ashcroft

Unless each of demand management or have consortium between ourselves and demand for legible actions based on current market conditions. we keep paying them for years except statements they falied to deliver. if this keep going they will take the salaries from debt and burn shareholders. everyone need to start pushing company for proper answers and action plan

Saudi Arabia produces approximately 10.5m barrels of oil a day. The overall production is approximately 96.8m barrels a day with demand lets say at 95.4m. An surplus per day of approximately 1.4m barrels of oil. Oil as we know is inelastic i.e. an over production of 2% for example does not lead to a 2% price drop but rather a huge drop in price and vice versa an under production of 2% does not lead to a 2% increase but rather a spike in price. Given this and given the fact that the Saudis are holding all the OPEC members (that want to cut production) and all the non-opec members that would also agree (excluding the shale producers) would it not be a good idea for Russia, Venezuala, Iraq, OMA, Nigeria, Algeria, etc etc to say to the Saudis -- OK you go ahead and sell your oil for 30 dollars a barrel but we are now setting a minimum price of 50 dollars for our oil. So the market can have Saudi Oil at 30$ but if the other producers set a minimum price below which they will not sell their oil then the price will rise as the market needs the other 85m barrels of oil. The other producers between them can cut the necessary 2% of production whilst selling their oil for a much higher price. If they sell at 50$ for example this hardly encourages over production and in the longer term will also lead to a balanced market. They should call the Saudis Bluff

possible buyer from London for Whitegate refinery

LLooks things getting worse, if even always super-optimistic Spuddy now express his concerns

thank you spuddy, thats my concern as well we need to challenge them about salaries and how they take the company forward. looks like IIs are aware of whats happening. takeover is good option else these bunch will keep throwing carrots, we fed them huge salaries for years and nothing in return. people been lured with false promises

No news from the Management I am hopeful that the Oil Markets will turn 2016/2017. However I am not happy with the communication style nor the decisions made by the management at Providence. We are kept entirely in the dark. It is like being on a plane with ever worsening turbulence and not a word from the captain. I believe that we the small shareholders are not being well treated. We have no idea what the plan is or what is happening. Surely the plan cannot just be based on the chance of a Barryroe farmout. I am not happy with the salaries at this company. They are totally unjustified and I do not know if it is legal to borrow money and pay such extravagant salaries out of these funds. This given the fact that the company generates no income. It is very frustrating to look at. I believe that the Management should be explaining exactly what is happening and not hide behind the veil of what they call ¨closed period¨. Is it normal that we have no idea what is happening (Good or Bad). We were told nothing about Transocean. The company would have been bankrupt if Providence had lost the case. Does this seem ethical !!!!!!. We really have no idea what the agreement with Schlumberger entails. What are Schlumberger getting and what are they giving. We have no idea as to what would be the terms of a potential agreement with Melody Financing should the loan be extended. So we really have no idea about anything. This is not satisfactory. However Providence has good Assets which if correctly managed should be very valuable. We shall see !!!

is anyone in touch with the company, what assurances are they making

hi spuddy, are you hopeful with this management, they are making promises and changing goal posts often. they need to do aggressive salary cuts desperately

Best of luck Criona, Hopefully PVR pull off some kind of deal in the near future or the company may turn into another Petroceltic... Its looking possible with all the broken promises...