News Analysis

Saturday 30 August 2014

Oil rich? Why it's well worth risk to find out

Published 14/11/2012 | 17:00

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ALMOST everything we think we know about oil is wrong. The United States, long regarded as an oil addict, is set to replace Saudi Arabia as the biggest producer in the world within eight years and become completely self-sufficient a few years later.

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Once-poor countries dotted across a huge geological seam from Uganda to Ghana and all the way to South America are fast becoming wealthy and more democratic thanks to the discovery of oil and gas in remote areas once regarded as empty wastelands.

Ireland, long regarded as a joke in the oil industry, now seems to have large reserves off Kerry and is attracting interest from some of the world's oil majors.

There are two main reasons for these changes: new technology which gives access to places that were once completely inaccessible, and high prices which make the extraction worthwhile.

This week's news of another potential oil find off Kerry could yet save this country from its economic nightmare, just as North Sea oil saved Margaret Thatcher's bacon back in the 1980s and has contributed about $480bn to Britain's coffers over four decades. The potential finds are large, and there is every reason to wonder if our hour has arrived.

But before we get carried away, it is worth remembering that the various companies that have seen their shares soar in recent months on hopes of oil finds have yet to extract any meaningful quantities from the seabed. So far, they have done little more than take old information from drilling programmes in the 1980s and 1990s and plug it into new computer programmes.

Previous studies drew different conclusions because geologists were looking for evidence of North Sea-type rock formations which don't appear in Irish waters. All this means that there are good reasons to believe we have oil, but it remains far too early to be sure.

Oil is among the most divisive commodities on Earth, and it is already beginning to divide the public here.

In the leafy suburbs of Dalkey, well-dressed protesters are already handing out leaflets against the imminent arrival of a drilling rig from Providence Resources which is prospecting for oil close to Dublin Bay.

They claim the bay will be destroyed and several rare animals endangered, but the drilling won't bring jobs to the area or tax revenue to the exchequer.

While neither claim is likely to be correct (it all depends on how much oil is out there), the reality of Irish life is that this sort of local opposition can pay dividends. A handful of protests – based on claims about safety – have been able to delay the Corrib gas field since its discovery back in 1996.

One of the worst aspects of the national debate is our reluctance to talk about the national interest. We talk endlessly about sectional interests and local interests but rarely spend any time fighting for this country's interests in Europe or back home.

Disputes between Russia and Ukraine have already led to winter shortages and price spikes here, and there is no reason to believe we won't be caught up in any future posturing between these disputatious neighbours.

Ireland, which imports more energy than any other country in the EU, stands at the end of a very long pipeline, and we need to guard against a disruption to supply that would bring our power stations to a halt.

There are undoubtedly risks: extracting oil 200km off the coast and 4km below the sea's surface is not easy. People will probably die in accidents, just as they have died in the North Sea and elsewhere. There will be oil spills just as there have been almost everywhere else.

It may well be that the authorities conclude that drilling for oil in Dublin Bay or some other beauty spot around the country is not worth the risk. They may even be right in certain cases, but it would be a disaster for the country if what happened to the Corrib gas field is allowed to be repeated again and again in the years ahead.

The large amounts of oil that may have been found in Irish waters have the potential to transform the economy and insulate us from a world where one Israeli strike on Iran could bring our country to its knees.

Irish Independent

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