Providence billion barrel oil find confirmed off Cork coast
THERE is more and better quality oil off the coast of Cork than previously thought, explorer Providence Resources said today, adding it was looking for partners in a move that could lead to the country’s first commercial oil production.
Providence hiked its estimate of oil reserves at its flagship Barryroe project off the coast near Cork to as much as 1.6 billion barrels.
The group said it would now work to calculate how much of the oil can be extracted and start talks with potential partners, though any production is likely to be years away.
"Putting out this new oil-in-place figure ... is really the starting point for future discussions," Chief Executive Tony O'Reilly said.
"By the end of the year we'll be actively going out into the market, if the market hasn't already come to us," he said, pointing to Premier Oil's $1bn partnership deal a fortnight ago with Rockhopper in the Falkland Islands as an encouraging sign.
Providence said oil in place at the wells stood in a range of 1 to 1.6 billion barrels, against 373 to 893 million in previous estimates provided by third-party specialists.
Mr O'Reilly, whose family owns a 20pc stake in Providence, said the quality of the oil at Barryroe, one of its six drilling programmes, was also better than expected.
"It's a very sweet light crude that moves very well through the reservoir which is very important from a recovery perspective," he told RTE.
The new survey data has lifted analysts' expectations for the level of oil which can be recovered from the field.
"We have doubled our estimate of recoverable reserves to 200mmb (200 million barrels) and raised our price target (for Providence shares) from 1,245 pence to 2,000 pence," Liberum Capital analysts said in a research note.
Ireland is expected to benefit from the exploitation of oil by way of corporation tax and employment, said Mr O'Reilly.
While the find is substantial by Irish standards, it is dwarfed by the huge reserves found in the UK North Sea since the mid-1960s.
According to estimates from Wood Mackenzie, the total amount of recoverable reserves in the UK's ten largest oil and gas sites amount to 14.5 billion barrels of oil.
The Barryroe find, in the North Celtic sea basin, is one of a number of discoveries made in the 1970s and 1980s but which were deemed to be too small to be developed economically.
Higher oil prices and new technologies, such as more detailed seismic surveys and horizontal drilling, can now allow the oil to be extracted at a profit.
But the country may need replicate the drilling success in much deeper waters to the west if it wants to become a significant producer.
Shares in Providence have surged to nearly four-year highs this year on the back of expected resource upgrades at Barryroe, in which Providence has an 80pc interest. Lansdowne Oil & Gas, whose shares were up 1.6pc, has a 20pc interest.