IRELAND'S OIL

The Irish Republic may be close to securing oil revenue that could run into billions of euros, something that could, if wisely spent or saved help to reduce the financial consequences of the recent banking crisis. An Irish and UK company, Providence Resources Plc, says its Barryroe site, some 30 miles off the Cork coast, should yield around 280 million barrels of oil. Any Oil revenues generated will be dependent on the price of oil when its extracted and on licensing arrangements between the Oil companies and the Irish Government.

Providence Resources Plc rig at Barryroe, Ireland (Finbarr O'Rourke/Providence Reso/PA)

When production comes on line this could mark the beginnings of the Irish oil industry. Oil companies have spent decades of exploring around the Irish coast and off-shore. Providence Resources Plc plans to use multi-national energy giants to work within its licence, which the company secured from the Irish government for a nominal fee. The company has already secured the expertise of the world's leading oil multi-national, Exxon Mobil, to explore its site at Drumquin.

In Ireland, campaigners have been calling for Ireland's relaxed laws with relation to its natural resources to be overhauled and upgraded. At the moment Ireland gets around 25% of all profits, rising to 40% depending on the volume of oil and gas extracted. This tax take is significantly lower than it is in Norway and the UK, both of whom have much larger oil and gas resources. At the moment a barrel of oil comes in at about $110, €85 or £69, even 25% of the revenue should prove a huge boon for a country that has never successfully extracted a drop of oil before.

The Irish Government argues that the low rate is attractive to foreign companies as Ireland does not have the expertise or revenue to exploit any oil and gas reserves itself. Critics in Ireland point out that all exploration costs can be off-set against any tax liable ones, and that claims can go back as far as 25 years.  Providence Resources Plc, who are believed to have spent around £0.5 billion pounds exploring Irish waters, has divested itself of any UK onshore assets (28th September 2012) so they can focus their resources on bringing on-stream its drilling programme off the Irish coast.

Some campaigners in Ireland have warned that the oil from Barryroe may never even be landed in Ireland, but taken to refined in Europe or elsewhere, something that will mean fewer jobs on Irish soil. The Irish Green Party has reservations about just exactly how much oil and gas is actually there, as the quoted oil resource figures have not yet been tested. The RSPB (in Northern Ireland) is also concerned about potential oil and gas extraction from around Rathlin Island, off the County Antrim coast, which is a Special Area of Conservation and a Special Protection Area (SPA).

Meanwhile Providence Resources Plc says its aims to bring any oil from Barryroe to Cork, but that any decision will be made on a commercial basis closer to the time of extraction. For Irish politicians (and the media) though the prospects of even some 25% of the revenue from what may potentially been billions of euros worth of oil will be a significant boost to the country in the aftermath of the banking crisis.

One significant advantage that Ireland by being independent has over Wales is the fact that a significant percentage any oil and revenues generated will flow into Irish coffers rather than into the bottomless pit that passes itself off as the UK Treasury.  Scotland by virtue of having a parliament (with significant influence over Scottish finances) will also (unlike Wales) get a significant portion of any oil and revenues generated rather than simply sit and watch it get siphoned off into the UK Treasury.

A LITRE OF THE BLACK STUFF...

Stars: Red = Gas, Green = Oil

Ever since I was a child there has been off and on talk about exploiting the potential oil and gas in the Celtic Sea and the western approaches. Work has been quietly carrying on to explore and exploit the resources in Irish territorial waters for many years. Now what drives oil exploration is commercial viability, Esso first discovered oil of Ireland in the 1970s, but at the time it was perceived not to be a realistic commercial prospect, as oil prices were pretty low at the time. As the oil price has rocketed from around $10 to $15 a barrel to around $125 a barrel and demand has risen this is now longer the case.

The search for the ‘black gold’ off Ireland may now be about to deliver some tangible results. Now an Irish company has found the Irish Republic's first viable oil well. The oil exploration company Providence Resources plc has announced that it has made the discovery some 70km off the Cork coast. The exploratory Barryroe oil well has delivered double the amount of oil needed for future full-scale extraction to make commercial sense.

The exploratory well yield comes in at almost 4,000 barrels of oil a day. Providence Resources Plc incidentally also has drilling permits in Northern Ireland. The company is now seeking international investors to help it exploit the well and the surrounding field, which the firm hopes will contain many further viable wells.

At the moment the bulk of Ireland’s energy comes from imported oil. Oil accounts for over 60% of Ireland’s overall energy consumption, significantly above the EU average. As Ireland’s economy grew, so did their reliance on imported oil. Ireland is also heavily reliant on gas and Ireland’s consumption of gas is increasing rapidly. There is now a major international shift from oil to gas as a source for power generation.

With oil supplies expected to decline in the years to come and growing efforts to reduce the emissions of greenhouse gases, many see gas as the primary energy source for the 21st century. In Ireland gas is extensively used for heating and more than 60%of our electricity is also generated by power plants fuelled by natural gas. No wonder there is a degree of excitement in Ireland at this discovery.