Saturday 25 October 2014

Emerald Oil: Will it make us rich again?

Until recently, critics of Irish oil exploration complained that it produced a lot of guff but very little gush. But now healthy scepticism about the industry is giving way to optimism that an energy boom can play a role in our economic revival.

The oil is beginning to flow off our shores. Inland, advocates of fracking – a highly controversial technique for extracting gas – believe that untapped reserves along the border in north Leitrim could supply much of our needs for a quarter of a century. But it has also heightened fears of water pollution.

Experienced analysts now believe the odds are stacking up in favour of a thriving oil and gas industry that could provide thousands of jobs and sorely needed tax revenues.

In this rosy scenario, either Cork or Galway could turn into mini-green versions of Dallas in an oil rush.

The oil magnates point to the example of Aberdeen in Scotland. Forty years ago it was a sleepy fishing port. By the 1980s, with the North Sea oil, it was a booming energy hub.

By the middle of the last decade an estimated 140,000 people in the Aberdeen area had jobs linked to the energy industry.

The sudden surge of interest in Ireland from the JR Ewings of this world has been prompted by last year's dramatic oil strike by Providence Resources in the Barryroe oil field off the coast of Cork.

Based on drilling from an exploratory rig, the company estimated the total amount of oil in place at up to 1.6 billion barrels.

Andrew Whittock, a London oil industry analyst with Liberum Capital, said: "We know that there is oil in Barryroe, and that it rises to the surface. There have been six wells drilled there, and oil has come out of six of them. We don't yet know exactly how much."

Oil firms spend between $100m (€75m) and $200m (€151m) on each of these exploration drilling wells.

"The oil companies are not just spending that kind of money for the fun of it," says Whittock.

Exploratory wells are being placed all around the Irish coast, including, most controversially, just 10km off the Dalkey coast in Dublin Bay.

"Ireland has already had a commercial gas field at Kinsale, the Corrib gas field will produce gas soon, and we now know more about oil at Barryroe," adds Whittock.

"In all likelihood there will be more discoveries, and if this reaches a critical mass you could see an offshore oil service industry starting in Ireland. This could create thousands of jobs."

The businessman, who is still reported to play rugby at the age of 66, hit the headlines in 2011 when he sold his Cooley distillery for €72m to the US spirit company Beam.

Now his company is hunting for oil in the deep waters of the Porcupine Basin, far off the west coast.

The snag for Petrel is that any oil is 200km from the coast and lies beneath 1,000 metres of water and under deep beds of rock.

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