Time to tap into our energy supplies

HOPES are again being raised of a major gas find in a huge area in the Atlantic, about 150km off the west and south coasts.

The Porcupine Basin and other areas in the near Atlantic contains over scores of undrilled oil and gas prospects and, looking into the future, hopes are that it is from these areas our future energy supplies will come.

An announcement by Communications, Energy and Natural Resources Minister Eamon Ryan that exploration licences are again being offered in the basin has prompted renewed interest in the whole area of undersea exploration.

In the past decade, our dependence on imported oil and gas has grown to over 85%. This reliance on imported fuels from volatile areas of the world leads to price instability. As well as having to pay premium prices for imported energy, there’s also the crucial issue of reliability of supply. How do we know we’re not going to be cut off in the event of a war, a natural catastrophe, or some other crisis?

All of which underlines the need to find our own supplies.

A decade ago, about 95% of our gas supplies came from the Kinsale Field. But only five exploration wells have been drilled in the Porcupine area in the past 20 years. While the area may have considerable potential, it remains underexplored.

Finding oil or gas offshore is no easy task. And, even if it’s found, there’s a big logistical task in piping it ashore, with possibilities of conflict with environmentalists and local communities.

Unsurprisingly, the Porcupine area has been classified as frontier acreage because of the challenging environment in the often turbulent Atlantic. Much of the Porcupine Basin is in deep water, subject to harsh weather and rough seas, areas that are expensive and difficult to drill.

The latest licensing round will offer 229 full blocks and three part blocks in an unexplored area of about 63,500 square km.

According to oil and gas consultants Hannon Westwood, Porcupine basin and other areas in Ireland’s Atlantic basin contain more than 160 undrilled oil and gas prospects. In advance of the award of licenses, the Government will undertake an environmental assessment of the area. The final deadline for applications for licences is December 18.

With oil prices high and rising, there is a keen demand for high quality exploration opportunities which, the Government maintains, Ireland has to offer. A key driver of demand for high-quality exploration opportunities is the strength of the economy and the increasing demand for energy. Energy demand is forecast to rise by 2-3% per annum until 2020.

A Green Paper on energy policy set outs the twin aims of encouraging investment by the industry in exploration and production of oil and gas, while at the same time ensuring that the public gets a good return from the exploitation of its natural resources.

During the past three decades, there’s been a multi-million-euro investment in exploration here. But, even allowing for successes such as the Kinsale/Ballycotton discoveries during the 1970s and 1980s and, more recently, the discovery of Corrib in 1996, the results have been disappointing.

On a positive note, work by the Island Oil & Gas company is bearing fruit in the Celtic Sea. An appraisal well at the western end of the Seven Heads field and an exploration well on the Old Head prospect east of Kinsale are both demonstrating the presence of gas.

On the other hand, the Lundin group’s decision to abandon its Donegal exploration shows there are no guaranteed returns on investment. A large bank of data has been gathered about areas that may have gas or oil and two regional petroleum systems studies have shown up sizeable, yet-to-find resources in our Atlantic basins. According to Mr Ryan’s department, the scale of oil and gas resource potential is comparable to that of other neighbouring Atlantic frontier areas.

This is seen as encouraging news. As more research highlights the potential of Ireland’s resources, the Government hopes opportunities will be recognised by the industry which will result in increasing investment in exploration. The Government has been criticised for “giving away” our natural resources in the past, but Mr Ryan went out of his way to stress that the changed tax regime would apply to any Porcupine Basin finds. Profitable fields will pay up to 40% tax, a top rate increase of 15% for the oil and gas companies involved.