Now that Providence Resources has struck black gold, global players such as ExxonMobil are knocking on the door. By Thomas Molloy
LIKE most people living in Ireland during the 1980s, Tony O'Reilly was glued to the television on Saturday evenings to watch 'Dallas', which charted the fortunes of a mythical Texan oil family.
While the soap opera enthralled millions, it must have had a special resonance for the 15-year-old son of the country's leading businessman, who was then engaged in an ambitious but ultimately futile attempt to extract large quantities of commercially viable oil from the Irish Sea.
Fast-forward three decades and Tony O'Reilly jokes that he has learned that the oil industry has "less booze, less Stetsons and less buxom blondes" than the soap opera suggested, but it is clear that he remains enthralled by oil's potential. "It's more dynamic than the mining industry; there is still the allure of the black gold," he says. "It's a very fast-moving business."
After a few knocks in a varied career that has taken him from Wall Street in the 1980s to the remote countryside of Galmoy in north Kilkenny, the 45-year-old is walking on sunshine. Providence Resources, the three-man oil company that he took over seven years ago, is engaged in the biggest exploration programme ever seen in Irish waters and appears to have hit gold in an oil and gas field off Kinsale called Barryroe.
Sitting in Providence Resources' spartan offices opposite RTE's sprawling campus in Donnybrook earlier this week, Mr O'Reilly lifts a small test tube of dark oil from Barryroe from his desk. "You could say that little thing cost us $75m," he says with a smile.
His BlackBerry and iPad bleep about every 10 minutes during a 90-minute interview, one sign that what he calls Providence's "wilderness years" are over. Household names such as ExxonMobil are knocking on the door almost daily now that Providence has found what it believes to be large quantities of oil and gas.
He admits that 2003, 2004 and 2005 were very tough times. "They were the wilderness years when nobody takes your calls."
While it might seem difficult to imagine people ignoring calls from Mr O'Reilly -- he does after all have a name to conjure with and considerable charm -- the record speaks for itself.
Providence was so unsuccessful at attracting large multinationals to share the risk of drilling for oil that the shareholders were forced to fund almost the entire cost of the initial exploration programmes. This forced the company to take on much higher risks than normal but also allowed Providence to buy up large exploration fields inside Irish waters that were of little interest to anybody else. This means that if things go well Providence will do very well indeed.
The company and its partners now plan to spend around €500m over the next two years to find out where oil can be extracted. The eventual bill for extracting the oil is set to reach several billion dollars. "It's our playground and we want to play with people with capital," Mr O'Reilly says with relish.
He appears convinced that his company, the nascent Irish oil industry and the country are on to something big.
"Five years from now people will forget that we started the ball rolling," he says.
He draws inspiration from Irish oil barons such as Tullow Oil founder Aidan Heavey (who owns the building that houses Providence's headquarters) and John Craven, whose Cove Energy found oil in Mozambique when conventional wisdom said it could not be done. The oil majors tend to pile into regions once oil has been discovered and this will be repeated in Ireland, he adds with quiet conviction.
There is nothing sudden about Providence's recent finds. John O'Sullivan, Providence's technical expert, has been studying Irish oilfields for more than 15 years, while colleagues such as Fergus Roe and Donal Meehan also have decades of experience under their belts.
Mr O'Reilly knows there are problems ahead even if Providence finds oil. One of the company's fields is located less than 12 nautical miles from the prosperous southside suburb of Dalkey and planning is likely to be difficult if the company finds oil. The experience of Corrib, where local protesters have delayed a major gas field for years, haunts everybody looking for oil or gas in Ireland today.
Still, he draws some solace from his time as chief executive of Arcon, a zinc mining company that helped turn Ireland into the world's largest zinc producer. Those years in the early 1990s saw a young Mr O'Reilly criss-cross Kilkenny as he tried, and ultimately succeeded, in gaining support for the mine from organisations as diverse as the IFA, the GAA and trade unions.
Looking back on those days, Mr O'Reilly says they were some of the happiest days of his working life and the period where he first had a chance to connect to middle Ireland after an education that included its fair share of elite educational establishments, including Brown University, which is located in Providence, Rhode Island, and lent its name to the oil company he now heads.
Certainly both Providence and Arcon were happier than his time at Wedgwood, the UK china company in which his father was also a shareholder and which struggled in the aftermath of the September 11 attacks in 2001 and the SARS outbreak. He almost shudders as he describes waking up one day knowing that he would have to close two earthenware factories in Stoke-on-Trent. "I hated having to downsize," he says now. "I won't talk about headcount. It's human beings but I had to do what I was hired to do."
Mr O'Reilly was himself downsized in the 1980s when he worked for Morgan Grenfell in New York. Fresh out of college, he had hardly got his foot in the door when his unit was bought by a rival and closed down.
He says it took some time to land his next job (as an analyst at Coopers & Lybrand) because people were happy to invite him for interviews on the strength of his father's requests but reluctant to offer real jobs or believe that he was serious about work.
Looking back, he only betrays one regret: that he worked at another merchant bank while at university. "I had this stupid idea that I should work in college," he says now. "Perhaps it was having a Class A father, a super achiever."
Whatever the reason, the history and economics graduate recommends that young students avoid working in college if possible and pick a portable degree which can be used anywhere. He also offers a simple reflection on the business world halfway through a career that has seen several ups as well as a few downs.
"Business is relatively easy. It's quite simple. It's usually the people who screw it up."