Mr. Pat Rabbitte T.D., Minister
Atlantic Ireland 2011, Dublin - 17 October 2011
Good morning and welcome to Atlantic Ireland 2011.
I am very pleased to open this important petroleum conference and exhibition this morning. The theme this year will continue to focus on improving our knowledge of Ireland’s petroleum potential. A Prospects-To-Go session for exploration companies seeking partners will also again feature.
I understand that there is a record attendance here this year with 200 delegates attending compared to about 150 last year. This is very encouraging, as is the presence of so many exploration companies, contractors, researchers and others involved in the sector. I was also taken by the impressive Exhibition area and Poster displays. In welcoming all delegates and participants in the conference, I would like to extend a special welcome to those of you who have travelled from overseas.
The principal focus of this conference is on deepening knowledge and developing our understanding of the petroleum potential of the Irish offshore. I believe that deepening our knowledge of this potential, through appropriate petroleum research projects, is critical to attracting international exploration investment to Ireland. Petroleum research is of course also critical to informing the development of ongoing and effective exploration programmes. In that context I am encouraged by the impressive range of research projects and initiatives that are the subject of this conference.
The vital role being played by applied petroleum research in advancing our knowledge of Ireland’s oil and gas potential needs to be acknowledged not just from an industry perspective but also from the contribution it can make to informing the Government’s licensing strategy.
As Minister with responsibility for natural resources I would like to share some thoughts with you today in relation to the Government’s approach to offshore exploration. Although Ireland’s offshore has recognised petroleum potential, the truth is that it is an area that is very underexplored. While even a small number of new commercial discoveries would bring significant benefits in terms of both tax revenue and strengthened energy security of supply, this is unlikely to happen unless we can bring a new momentum to the level of exploration activity. More data acquisition and more exploration wells in particular are essential to unlocking Ireland’s oil and gas potential.
Despite the extensive technical work performed in recent years and the demonstration of substantial prospectivity for hydrocarbons in our offshore basins, the pace of exploration activity has remained stubbornly low. Ireland’s entire offshore area has only seen fourteen exploration wells drilled since 2000. Yet, on a positive note, these fourteen wells yielded four discoveries – the Dooish gas condensate and Bandon oil discoveries off the west coast and the Old Head and Schull gas discoveries off the south coast.
On a less positive note, of the four exploration wells drilled west of Ireland since 2005, only one well was drilled in the Rockall Basin and no drilling at all took place in the Porcupine Basin – both vast areas with demonstrated prospectivity. During the same period only modest amounts of seismic data have been acquired, and these have lately tended to be local, block-specific 3D surveys. This clearly demonstrates that the petroleum potential of these basins is simply not being tested. This is a fact that represents a real challenge for Ireland and is a topic I will return to.
There are some positive signs too as over the next two years, several prospects are being prepared for drilling, including some quite large prospects. This is something to look forward to and definitely a positive sign compared to recent years. This drilling activity is set to commence as early as next month when Providence Resources intends to spud an appraisal well on the Barryroe oil discovery in the North Celtic Sea Basin. I wish those companies that are gearing up for drilling every success.
Ireland’s offshore exploration experience over the past decade demonstrates both the existence of petroleum potential and the need for an increased level of exploration. Offshore Ireland contains multiple exploration targets and several drillable prospects and leads have been identified. I am confident that increased drilling levels will result in more commercial discoveries.
This morning I would like to focus on a small number of highly relevant matters that will influence the extent and pace of exploration going forward. The first of these is the outcome of the 2011 Atlantic Margin Licensing Round. The second relates to providing free access to an important research study. The final matter, which is perhaps the most complex, relates to how to meet the challenges now facing us in the aftermath of the Atlantic Margin Licensing Round as we develop a clear and effective strategy for the next number of years. That strategy will be developed against a backdrop where there is some debate on the overall regulatory framework applying to petroleum exploration. I have engaged on the question of Ireland’s fiscal terms in the Dáil and with the Joint Oireachtas Committee on Communications, Natural Resources and Agriculture who have expressed an interest in the matter. To help the Joint Committee, my officials recently made a detailed presentation on Ireland’s exploration history and the rationale for Ireland’s licensing terms, both fiscal and non-fiscal. Going forward I will be happy to continue to engage with the Joint Committee in this regard.
2011 Atlantic Margin Licensing Round
I will now turn to the results of the 2011 Atlantic Margin Round, which I know many of you have been anxiously waiting to hear. The Round featured a number of special initiatives designed to encourage new momentum in the level of exploration activity in the Irish offshore. Under the Round, Licensing Options were offered in frontier basins in the Irish offshore for the first time. I am pleased to say that the exploration industry has responded in a positive manner to this initiative. The following is a summary of the key results of the Round:
- Fifteen applications were received by the deadline, on 31 May, with some companies submitting more than one application.
- The total area covered by the applications was just over 15,000 square kilometres, with water depths ranging from less than 200m to more than 2,500m.
- A total of twelve companies were involved in the applications and of these seven companies are new to Ireland.
- There were four applications that were directly competing for two specific areas and could only result in two Licensing Options being offered.
- I will be offering thirteen Licensing Options subject to the applicants’ formal acceptance of the terms and conditions, including work programmes.
- These awards will comprise one Licensing Option in the Rockall Basin, two Licensing Options in the Slyne Basin, nine Licensing Options in the Porcupine Basin and one Licensing Option in the Goban Spur Basin. Overall, therefore, there is a relatively good geographical spread from North to South.
- Despite the overlaps, all companies that submitted applications are being offered acreage, though not always the full areas applied for.
The outcome of the Round confirms that the strategy of offering two-year Licensing Options rather than offering Frontier Exploration Licences has had a positive result. Both the number of applications and the number of proposed awards are the highest of any Frontier Round, the first of which was in 1994.
It is positive too that the companies involved in the Round included both new entrants to Ireland, together with companies already very active in the Irish offshore.
The seven new companies that will be offered acreage are: Antrim Energy; Bluestack Energy; Europa Oil & Gas; First Oil Expro; Petrel Resources; Repsol Exploration; and Two Seas Oil & Gas Ltd.
The five companies already active in Ireland are: Providence Resources Plc; Chrysaor; Serica Energy; Sosina Exploration and San Leon Energy.
I look forward to the companies involved in the thirteen applications that have been offered Licensing Options, progressing their work programmes in a successful manner.
Further information on the offers being made will be presented here later this morning and details will be posted on my Department’s website.
Access to Petroleum Systems Analysis Study
I am determined to do what is possible to accelerate the search for petroleum and to improve exploration effectiveness. Access to research analysis is of paramount importance in this regard. In recent months there has been a considerable degree of comment, a good element of which has not been that well informed, that has focussed on an estimate of Ireland’s yet-to-find petroleum potential.
The ‘Petroleum Systems Analysis of the Rockall and Porcupine Basins Offshore Ireland’ study is a comprehensive study which has underpinned much of the technical promotion efforts of my Department in recent years. This important industry-supported study was published in 2006 and provides the first major petroleum resource assessment ever conducted for Ireland’s largest basins.
With a new phase of frontier exploration about to kick off, I believe that this valuable piece of work would be of considerable assistance to companies in progressing their exploration efforts, particularly the new entrants. As of today this report will be made available at no charge. Digital copies of the report may be obtained at this conference at the Petroleum Infrastructure Programme booth.
I also look forward to the completion, next year, of the major transatlantic Plate Reconstruction Project which is being co-funded by the Canadian Government of Newfoundland Labrador and the joint Irish Government-Industry Petroleum Infrastructure Programme. My Department has also provided a considerable amount of technical data from its extensive archives to facilitate the work and is actively involved on the steering committee. This contractor-led project also involves leading Irish and Canadian universities and should provide exciting new insights into the potential occurrence of petroleum in our frontier basins. I understand that the work is advancing very well and that you will be hearing much more about this from the project team this morning.
The value of expanding and improving on existing petroleum systems analyses and resource assessments is fully recognised. Accordingly, the Petroleum Affairs Division of my Department will work closely with its partners in the Petroleum Infrastructure Programme to develop and execute essential research projects during 2012 and 2013. The projects must be fully aligned with the Government’s policy and strategic objectives in relation to the exploitation of our indigenous natural resources.
Next August, Ireland will have the honour of hosting the 3rd Conjugate Margins Conference at Trinity College, Dublin. Previously both Nova Scotia and Portugal have held this prestigious bi-annual event and we hope Dublin 2012 will be as successful. Geoscientists from several countries will be presenting the latest geological research on the Central and North Atlantic. And given that our own Plate Reconstruction Project is due to conclude around the middle of 2012, the timing of this conference should allow the presentation of final results. You will find the details online.
Future Strategy
Developing the best strategy to encourage effective exploration of Ireland’s offshore potential represents a number of not inconsiderable challenges. As I indicated earlier, while the outcome of the Licensing Round was positive in terms of the number of applications received, it is a matter of some concern that a relatively small number of applications were received over large parts of the deeper water basins where significant petroleum potential has also been indicated. When this fact is considered against a backdrop of almost no exploration drilling in recent years in some of our deeper offshore basins, it is clear that this is an issue that needs to be addressed.
Meeting these challenges will require action by a range of parties including many represented here at this conference today. We need to reflect on the outcome of the Licensing Round to see what lessons can be learned and to consider how the outcome of the Round should inform the development of the Government’s strategy going forward.
I would welcome the views of industry in this regard when it has had a chance to consider the outcome of the Round. There are many core issues to be addressed, including:
- How to encourage an increase in drilling and data acquisition levels?
- How to continue to encourage the take up of exploration licences and how to encourage more new entrants?
- How to encourage exploration companies to focus their attention more broadly in terms of our deeper water basins?
- And finally, but very importantly, how to fill data gaps where such data gaps of themselves represent a barrier to companies considering applying for exploration authorisations over large areas.
This is a time for innovative and inventive thinking. I am open to considering initiatives that would use the petroleum research funding managed by my Department to leverage additional investment in new data acquisition. I am open to considering changes in the regulatory framework that would encourage a greater focus by both contractors and exploration companies on underexplored areas of the Irish offshore.
The feedback I receive from industry will help to inform the decisions I make in the coming months on Ireland’s future licensing strategy. It will also help inform my decision as to where and when the next licensing will be held.
Returning to the present, delegates here today will be updated on current Petroleum Infrastructure Programme sponsored and other relevant petroleum research, as well as some of the commercial opportunities currently available. This is an ideal forum to engage on all aspects of petroleum exploration in Ireland and I encourage delegates to make the most of their short time here by visiting the booths and the poster displays.
Finally I would like to thank the presenters, organisers, sponsors and steering committee for making Atlantic Ireland 2011 possible and for arranging such a strong technical programme. I hope that the conference goes well…
Ends