Hopes rise as exploration companies step up their activities off Irish coast
Small companies such as Providence typically operate this way – doing the exploration legwork and going as far down the road as they can towards proving they have something worth chasing, then getting someone with the resources to exploit the prospect to buy into it.
Separately, Providence has managed to arouse the ire of the citizens of Dalkey and other parts of south Dublin. The Government granted the company an exploration licence for part of block 33 in the Kish Bank, close to the east coast. The Department of the Environment recently gave it a foreshore licence to allow exploratory drilling about 6km from Dalkey.
Background of opposition
A number of local groups claim there was inadequate consultation and want the process of granting the foreshore licence to start again.
The issue became more complicated when it emerged that the Minister for Arts, Heritage and the Gaeltacht, Jimmy Deenihan, recently designated an area stretching from south of Dalkey to north of Swords as a special area of conservation.
It is not clear just how this will affect Providence’s plans, but coming against the background of opposition from a prosperous area with a lot of political and media clout, it’s unlikely to make life easy.
That said, the company intends only to carry out exploratory drilling there and the State has already given it the green light to do this.
Providence recently stepped up its bet on Irish exploration by announcing it is selling its British interests, including the Singleton field in the south of England, for about €50 million.
Singleton produces oil and is therefore a source of cash for a company whose portfolio is otherwise made up of licences and options in various stages of exploration – necessarily involving a fair amount of hope value.
Difficult to extract
While Providence generated plenty of coverage in 2012, another homegrown player, Fastnet Oil and Gas, seems likely to do so in 2013.
The company recently announced that it acquired two Celtic Sea licences, 49/13 and Shanagarry, where oil and gas had also been discovered in the 1980s.
Fastnet’s managing director Paul Griffiths and shareholder John Craven were involved. The oil in 49/13 was found to be “heavy” – that is more dense than normal crude oil – meaning it was too difficult and expensive to extract back then. Changes both in prices and technology mean it could now be viable.
The gas simply was not wanted; the Irish market at the time was well supplied from Kinsale and there was no connection with Britain, therefore no place to which it could be exported. That, too, has changed – Kinsale is running out and there are two pipes connecting Ireland and Britain’s gas networks.
Along with Craven, Fastnet’s backers include other figures from Cove Energy, which was this year sold to Thai-based PTT for €1.5 billion, netting €150 million for its Irish shareholders.
Its executive chairman is Cathal Friel of Raglan Capital and formerly Merrion Stockbrokers. The company is making no secret that its main aim is to build a portfolio of suitable assets, bring in partners and possibly sell the operation.
Another familiar figure from the Irish exploration game, John Teeling, recently made headlines when Petrel Resources, which he founded, announced it had identified a reservoir in the Porcupine Basin that could potentially hold one billion barrels of oil.
The area is further west than Exxon’s interest, making it that bit more risky and difficult.
Difficulty is unlikely to dissuade Petrel, which previously targeted Iraq as the main focus of its operations, following the overthrow of Saddam Hussein.