THERE is an estimated 10 billion barrels of gas and oil buried under Irish waters, very little of it has been found and few are prepared to look for it.
If we could only find the bounty it would eliminate our national debt with a few hundred billion euro left over.
This could be a lucrative route out of the current economic mess or, more likely, a medium-term solution to energy security concerns.
However, drilling off the Irish coast has been characterised by poor returns. Since 1970, 178 wells have been drilled on sites off Wexford right up to the seas off Donegal – 125 of these are blind exploration efforts.
These have turned up two sites. One is the Kinsale Gas Field in the North Celtic Sea and the other is the Corrib Gas Field in the Slyne Basin. Around these two discoveries 25 wells have been drilled to appraise and develop the resource.
In comparison, more than 500 wells have been drilled off British waters, including a cluster in the Irish Sea and a large amount in the North Sea. These have resulted in the completion of in excess of 271 development wells, as opposed to those sunk for exploration and appraisal.
The Government believes much more can be done off Irish waters, but it has had a difficult job attracting exploration companies to take a punt in Irish waters.
To address this later this year Minister of State Conor Lenihan will begin an international selling exercise. He has planned to travel to London, America, Canada, the Middle East and Singapore.
This is on the back of a decision to launch a new two-year exploration licence which will be a less risky venture for smaller companies willing to investigate Irish waters.
In recent years the department also commissioned the geological research of the seabed, which put the estimate of 10 billion barrels of oil or gas in Irish waters.
Conditions for finding it are not perfect. For oil or gas to be found you need a porous reservoir underground, a build-up of hydro carbon material and a hard cap or a lot of mud to keep the goods from leaking in the sea.
Being close to a continental shelf does not help keep the reservoirs in place. Ireland’s neighbours have been luckier at finding spots with the right conditions, but Mr Lenihan said it was still a resource well worth investigating.
He said the licensing scheme, for all the major Atlantic basins, is a product which can be sold internationally, because it can better justify the risks. While he believes there is potential, he said nobody should get false hopes, especially unless activity is increased.
“It must be emphasised that we are talking about ‘potential’, which may or may not exist and, even if it does exist, 10s or even possibly 100s of exploration wells would be required to find it.
“Bearing in mind that only two or three exploration wells are typically drilled offshore Ireland each year, only one this year, this is a tall order.
“Clearly, unless there is a very dramatic increase in exploration activity, there could be little chance of discovering such huge reserves,” he said.
For 40 years, enticing speculators into Irish waters has proved difficult and since then it has delivered a poor level of investment.
For Ireland, gas has been the major discovery, particularly during the frenzy of exploration activity which began around the time of the 1970s oil crisis.
Oil has also been found. In two sites off the south west, the wells have been suspended to be harvested at another time, if the price is right. One is resting since 1983, the other was discovered in 2000.
In a sweep along the south east a number of oil and gas wells, where fuel has been discovered, have also been labelled P&A.
This means they have been plugged up with cement and abandoned until either the market justifies the investment or it becomes easier to get the product ashore.
There is also a clutch of wells in the same vein off the Clare-Galway coast. The goldmine in Irish terms was discovered in the North Celtic Sea, which has been called the Kinsale Gas Field.
The first drill to show any results struck in 1971. This was plugged. The exploration drilling continued. The most recent of the Kinsale development wells to be drilled was in 2003. These were all in relative shallow water, by international standards. They were also much closer to land than some of the more speculative sites off the west coast. There are other potentially profitable gas wells in and around the south-west coast.
But Mr Lenihan said these may end up having to be left alone despite what they are known to contain.
“Some of the wells will inevitably have to be plugged and abandoned, but others still have a chance to become producers, subject to suitable, commercially viable, development options, involving more than one discovery, being identified,” he said.
Access is Ireland’s biggest problem. The wild Atlantic Ocean, coupled with the depth and difficulty of the terrain has made exploration here unpopular. Test drilling must be conducted between May and September, because of weather and, even if it is successful, the gas must be brought onshore for refinement or refined out at sea and piped to land.
This cost scares investors.
Mr Lenihan said the exploration prospects have been damaged further by the tarnished reputation the country got over the disputes between Shell and the community around Rossport.
“The story of Corrib travelled worldwide and would not encourage many exploration companies,” he said.
Corrib, which is situated in Slyne maritime area, is expected to hold one trillion cubic feet of natural gas. In monetary value this is €1.5bn in revenue for the state in royalties and corporation tax.
For the first five years, it should provide a short-term solution to energy security issues, by providing up to 60% of the gas demand. But Corrib is only a medium-sized yield for the big exploration companies.
Kinsale is up to 70% bigger.
There could be more elsewhere or further out in the expanding Irish territorial water.
The real Ireland, which extends out to where the ocean floor plunges at the continental shelf, is eight times the size of the four provinces above sea level.
And it could grow even further if Ireland is successful in its claim for the disputed Rockall rock, a jagged outcrop between here and Iceland which would give its owner rights to the vast Rockall Hatton basin.
Iceland, Ireland and Britain all have claimed it as their own. Recently a British sailor got permission to renew a naming plaque on the rock in the name of his country, but this is worth nothing as the final arbitrator will be the United Nations.
Mr Lenihan said an exploration team will be brought in to assess the potential value of the Rockall Hatton basin in the near future
Activity off the Irish coast has primarily been driven by the big companies with money to invest, unlike other natural resources where smaller enterprises have kept the market simmering when the multinationals lost interest.
This is something the two-year licence is hoping to address.
Some 34 separate business entities have dived beneath Irish waters looking for fuel. But one company stands out. Of the 178 wells sunk, Marathon has been responsible for 54. Behind it BP has tried 15 wells and Esso 14.
Tapping more hungry smaller companies and luring them to unexplored sections of sea bed will be the next challenge in the search for the promised 10 billion barrels of gas and oil.
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