A Dublin company is about to start a major drill for oil off the Kerry coast
It will be one of the first such projects by a local company in Irish waters since the recession.
A DUBLIN FIRM will soon start drilling for oil off the coast of Kerry, one of the first indigenous companies to launch such a project of the Irish mainland in years.
Providence Resources said this morning that it is on course to drill in the southern Porcupine Basin, about 220km off the south-west coast of Ireland, in June.
The location where the company plans to drill covers licences for two of its projects, named ‘Druid’ and ‘Drombeg’. Providence has said that there could be billions of barrels of oil at its Druid location.
Last month the Irish firm announced that it had signed a deal to drill the well with UK-based Cairn Energy, one of the world’s largest oil and gas explorers.
In its annual report released this morning, the company’s CEO, Tony O’Reilly, said: “This summer we are embarking on a very exciting period of operations starting with the drilling of a well targeting the multi-billion barrel potential of both the Druid and Drombeg exploration prospects.”
The company estimated in August that the Druid exploration well could cost $35 million.
As part of the deal it struck with Cairn, the UK firm will cover 45% of the costs of drilling a well, up to a cap of $42 million (€40 million).
Providence Resources CEO Tony O'Reilly
O’Reilly said that the deal with Cairn “will see Providence’s cost exposure nearly halve”. Providence has already contracted a drilling ship and it expects the operations to start in June.
Potential
Providence estimates that there could be as much as 3.2 billion barrels of oil at its Druid location.
However, this is an ‘un-risked’ estimate of prospective resources – these estimates do not factor in the chance of drilling a successful well.
As oil drills generally have low success rates, particularly in Ireland, the risked value would likely be a fair bit lower.
The estimate also refers to prospective resources. This refers to all the oil that a company’s research shows should exist at a location. This differs from reserves, which covers oil that is confirmed to exist and can be recovered at a reasonable cost.
The Druid licence location (bottom left)
Prospective oil estimates are often much higher than proven reserves. However, if drilling is successful at Druid it will likely result in a large oil find.
Barryroe
O’Reilly also said that Providence is working on deals to get partners to help develop several other oil projects.
“Whilst we are not in a position to confirm any further details at this time, we are working diligently to successfully conclude matters,” he said.
The company has been struggling for years to progress work at its Barryroe oil field, which is estimated to hold slightly over 300 million recoverable barrels of oil.
O’Reilly said: “The further appraisal and potential development of Barryroe remains another key objective for Providence.
“With this in mind, we are commencing various pre-permitting activities in anticipation of future drilling.”
