Oil companies haven't given up on striking it rich off the Irish coast

A SLEW OF indigenous resource exploration firms have been given the green light to trawl through Irish waters in the Atlantic in the hopes of finding valuable oil and gas reserves.

Some 14 new licences have been awarded by the Department of Communications, Energy and Natural Resources under the second phase of a tender for offshore blocks that gives companies the rights to new exploration areas for two years.

The current stage of the offer involves 11 companies, which include Dublin-based outfits Providence Resources and Petrel Resources.

The entire ‘Atlantic margin licensing round’, as it was labelled, attracted 43 applications, the most Ireland ever received. By comparison, the 2011 round received just 15 formal submissions.

Several international oil giants, including Exxon-Mobil, BP and Statoil, took up licences in the first phase of the round, the results of which were announced at the start of 2016 when oil prices were at near-record lows.

At the time, oil companies around the world were slashing expensive exploration activities due to the low price of the commodity, which was trading at $30 a barrel.

However, the resource has since recovered somewhat to just under $50 a barrel, although prices are still far lower than those seen towards the end of 2014 when oil was trading at more than twice current levels.

Positive interest

The junior minister for natural resources, Seán Kyne, said that the high number of applications reflected well on the Irish oil and gas sector.

“At a time of very low oil prices, the strong interest in the round is very positive,” he said.

“Industry’s response to the round demonstrates the perceived positive prospectivity of Ireland’s offshore.”

A total of 28 licences were awarded under the two stages of the round to 21 different companies. Many of these were focused in the southern Porcupine Basin, a large area off the south-west Irish coast.

Historically, exploration in Irish waters has been risky and expensive. Although over 200 wells have been drilled in the past decades, only two commercial finds have ever been made. Both of these, at Corrib and Kinsale, were gas fields.

One of the most recent and high-profile cases involving a major oil company involved ExxonMobil spending $160 million drilling in the Porcupine Basin. However the results were ultimately disappointing and the firm failed to find any commercial amount of oil.

A sign for the location of the Corrib gas pipeline

Struggling to stay afloat

The move for more exploration licences comes at a time when indigenous Irish oil companies are struggling to keep afloat in a low oil-price environment.

These include Providence Resources, some of whose shareholders are threatening revolt amid the company’s inability to progress work at its potentially lucrative Barryroe oil field.

Another Dublin-based exploration firm, Petroceltic, recently went into examinership amid mounting losses and a bitter boardroom battle with its largest shareholder.

However several firms have expressed optimism about the state of Irish exploration, with many pointing to reduced drilling costs, which have dramatically fallen alongside the price of oil.