Galveston field begins production

THE US-based Galveston Island gas field – in which Irish exploration company Providence Resources owns a 10.8% stake – has begun producing gas, it was announced yesterday.

The AIM and IEX-listed oil and gas exploration company, which is headed up by Tony O’Reilly Jnr, said yesterday via a statement that the first gas was encountered last Friday.

“The successful development of Galveston Island A-155 is in line with our stated objective to grow our production in the US Gulf of Mexico,” Mr O’Reilly said.

It has been estimated that gas to a distance of 20 billion cubic feet can be recoverable from the field and net production attributable to Providence could be up to 200 barrels of oil equivalent per day (boepd).

“Management has guided that ongoing remedial and development work on its US assets will increase Providence’s net production by 900 boepd by the middle of the third quarter of this year.

“Overall, Providence is targeting group production of 3,000 boepd by the end of the year, up from 2,000 boepd in July 2008,” said Caren Crowley of Davy Stockbrokers.

Providence also recently confirmed that drilling will, at some stage, definitely take place at the highly rated Dunquin prospect off the south-west coast of Ireland – an asset in which the company holds a 16% stake.

Meanwhile, oil prices rallied after a drop in value over economic concerns and doubt over true demand levels.

US crude oil was up by 60c per barrel to $68.65 while Brent North Sea oil was up by 35c at just over $68. US crude had briefly reached $75 per barrel last week, which was its highest pricing point for nearly a year.