Ramco gets two new gas exploration licences

Brian O’Mahony, Chief Business Correspondent

This follows hot on heels of the recent announcement by the group that drilling off Kinsale had been far better than originally expected.

The company’s existing Seven Heads gas field nearby is due to start producing natural gas by the end of this year. According to its own estimates, it could be in a position to supply up to 10% of Ireland’s existing natural gas requirements. At present, over half of our gas requirements are imported as reserves from the Kinsale Head region continue to be run down. This latest exploration zone targeted by the group is called Midleton, situated 60km from Seven Heads.

It has similar geological characteristics to the commercially proven Seven Heads gas reserves and is regarded as highly prospective.

Recently, the group announced that testing of its second gas well off the Kinsale coastline “substantially exceeded expectations.”

That good news has been backed by a €86.86 million project finance loan from the Bank of Scotland, that is facilitating the exploration of the Seven Heads gas project.

The well results are a huge boost for Ramco, which recently increased its stake in Seven Heads to 86.5% from 49% after slashing exploration investments elsewhere and selling its 165 million share in the Azeri Chirag Gunashi fields off Azerbaijan. According to a company statement, the well produced dry gas rates in excess of 34.3m cubic feet.

At the time, Ramco chairman Steve Remp described the outcome as a “great result for Ramco, our partners Marathon and above all for Ireland.” He also pointed out that the team still had another four wells to go and said the project was “not done yet.” The find is expected to result in greater competition in the market and analysts believe consumer gas prices could drop by 2-3%. More than half of the Republic’s gas requirements are imported at the moment through the former State utility Bord Gáis.

Job Langbroek of Davy Stockbrokers, commenting on the results, said they confirmed Seven Heads was now established as the next major source for Irish gas.

“The flow rates from this well are extremely important for the future of Irish gas.

“Seven Heads is clearly a significant development,” according to Mr Langbroek.

The company is to start supplying the Irish market in the last quarter of this year, which is in line with earlier company predictions.

Ramco operates the Seven Heads field with the US petroleum company Marathon and Norway-based exploration company DNO.