Providence mulling return to foreign waters

By Geoff Percival

Providence Resources is considering a return to drilling for oil and gas in international waters, albeit as part of a long-term growth strategy.

Speaking after the Irish explorer’s agm in Dublin, chief executive Tony O’Reilly Jr said management would be interested — in the long-term — in looking at opportunities elsewhere in Europe.

Providence turned its entire focus to offshore Ireland in 2012 following the sale of its offshore assets in Nigeria, the Gulf of Mexico and onshore Britain.

Providence’s near-term focus is, however, very definitely on Ireland, and the company is eyeing another large-scale drilling project by 2020.

Mr O’Reilly confirmed that its long-awaited farm-out deal for its flagship Barryroe field off the Cork coast is expected to complete, following the granting of full regulatory approval, before the end of September.

The company announced a Chinese consortium, headed by Beijing-based investment company APEC Energy, as its development partner at Barryroe in March. Mr O’Reilly said, yesterday, that APEC is interested in partnering Providence on other unnamed prospects.

Providence already counts Italian oil major Eni, French giant Total and Scottish explorer Cairn Energy as development partners on a number of its prospects off the west coast of Ireland.

Seismic evaluation work on another of Providence’s highly-rated assets, the Newgrange prospect off the south-west coast, is due to take place over the next three months. Farm-in interest, from a number of potential development partners, has been and continues to be “strong” Providence’s management team said. Getting a deal over the line this year would allow for drilling during 2019 — an already busy year with a six-month, multi-well campaign already pencilled in, then, for Barryroe.

However, Mr O’Reilly seemed to suggest there was no immediate rush to finalise a deal on Newgrange before the end of 2018.

Management excitement, however, is rising over the company’s Dunquin South prospect, adjacent to the failed Dunquin North drill in 2013. Providence’s technical director John O’Sullivan said it is “maturing into a potential world-class prospect”, with an estimated 1.5bn recoverable barrels of oil.

Mr O’Reilly said Dunquin-South, which Eni now operates with Providence as a near 27% owner, could potentially see drilling by 2020.

Meanwhile, Providence is currently supplying information to the Irish Offshore Operators’ Association ahead of the start of hearings, next month, when a People Before Profit’s bill aimed at banning future drilling in Irish waters reaches Oireachtas committee stage.

Mr O’Reilly yesterday said the matter is likely to prove “a long process” but said the issue should be more about “evolution, not revolution”.

“The debate has to take place, but people have to deal with the facts. We have to keep the economy going and Ireland needs oil and gas for the foreseeable future. There are also the questions of jobs, tax benefits to the State and security of energy supply [to consider],” he said, but added the bill is “a concern” to the industry.

Mr O’Sullivan pointed out that New Zealand — which imposed a ban on future drilling in its waters — is now facing the prospect of gas shortages in less than a decade.

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