Serica to start drilling off west coast this year, admits tax situation is a rip off

by Fearbolg - S2S Wed Jan 16, 2008 21:49

Question:

Are the apologists for Shell and our spineless government now going to throw their support behind Serica as they queue up to take

another chunk of Ireland's future financial security? Or do they bat strictly for Shell?

Could we have a contribution from our old friends CL, Erris Exile, etc. about whether they're happy to see the Ray Burke deal being

repeated, as it will be again and again, or will they, now that I'm not criticising Shell, come out and condemn unconditionally the abject

giveaway of our natural resources and demand, as I do , that the people of Ireland are given back their birthright?

Let's hear from you, guys, you're not usually stuck for a comment.

by Chrissie Wed Jan 16, 2008 22:12

That depends on whether SHell have bought exclusivity doesn't it? What skite the 'Greens' turned out to be!!!

by CL Wed Jan 16, 2008 22:52

I have "never" defended the deal given to shell, here knock yourself out trying to prove me wrong http://lists.indymedia.org/pipermail/imc-ireland-newswire/
My only gripe is the misinformation being peddled by S2S.

by D Wed Jan 16, 2008 23:03

I am happy to point out the facts in defence of Serica, as I have done in defence of attacks on Providence and others in the past.

The plain fact is that Serica is planning to invest $ many millions in Irish natural resources. Contrary to the above, there is no "inevitable event of a major find", the overwhelming probability is that no find of any commercial value will be made.

It is also totally untrue that "all expenditure on exploration in Irish waters will be claimed back against tax". No claim of any kind can be made unless there is a discovery, it is developed successfully and makes a profit - in that case exploration costs can be deducted in the same way that any other costs can be deducted when calculating the amount liable for tax (that is what profit means, income less costs). The tax rate is 25% so the net effect is that, if a profit is made, 25% of exploration costs will be recovered in the form of a reduction in tax payable.

So Serica is planning to invest a large amount of money in Ireland at very high risk and no cost to Ireland and that is certainly "good for the people of Ireland".

by MacE Thu Jan 17, 2008 00:01

"...Serica is planning to invest $ many millions in Irish natural resources."

Leaving aside that Irish natural resources seemed quite happy to remain in Irish hands before this planned investment, surely Serica's "investment" is actually a very-well-educated gamble on finding huge reserves of oil or gas on which they will then have a monopoly of ownership (and in Shell's case, supply). 25% of the net profit is derisory compared to the value of these finds. The potential risk/potential reward ratio for exploration is nowhere near as bad as some contributors are making out. Can anyone advance an honest answer as to why we are (literally) giving away such control and wealth to multinationals?

by pedantic Thu Jan 17, 2008 01:18

The CEO of Serica Energy is called Paul Ellis, not Paul Allen.

by StatingTheObvious Thu Jan 17, 2008 01:37

maybe the govt saw what happens to countries who have natural resources and try to keep them for themselves!

nah! nothing so thoughtful!.

its quite simple. ray burke / bertie / fahey / dempsey are crooked traitors to Ireland, in the pocket of big business interests, and were paid off (probably fuck all too because they are idiots!)

by MacE Thu Jan 17, 2008 18:25

Well, Norway seems to be making a go of it. Not alone do they have both ownership and control of their resources, they also have them of some other countries' resources. Usually these other countries are developing countries, with one notable exception.

by D Thu Jan 17, 2008 22:31

You think that Norway is an example of a country where the terms offered to oil companies are tough?

Well, the national oil company does take a stake in each licence but it pays its share of the exploration costs and therefore also shares the risk. Futhermore, whether anything of value is discovered or not, oil companies can claim an immediate tax credit which means that they get a refund of 28% of their costs.

by MacE Fri Jan 18, 2008 05:59

I think Norway is a shining example to us all. Check it out:

“One of the myths propagated by left-wing agitators is that the development of the Corrib gas field off the Mayo coast will not benefit the ordinary citizen. This is wildly inaccurate…The truth is that huge profit from the exploitation of this Irish natural resource will flow into the exchequer. Over the next 15 years or so, hundreds of millions of euro will be generated for the public finances. The money will pay for better health services, for improved education facilities, for the alleviation of poverty, for investment in vital infrastructure. The people of north Mayo may have to endure some environmental degradation and to live with justified anxieties about their own safety. But the lives of millions of ordinary people will be made better as a result.

The bad news is that all of those ordinary people are Norwegian.”

“Our gift to Norway”, Fintan O’Toole, The Irish Times, 31st August 2005 (see http://www.ireland.com/newspaper/opinion/2005/0830/1122....html)

Pretty much says it all.

by D Fri Jan 18, 2008 08:55

"Pretty much says it all." It would do if it were true.

The fact is that the Norwegian people will receive 16.425% of the profits from Corrib (after paying tax in Ireland, through their 60% ownership of Statoil's 36.5% interest in Corrib) and the Irish people will receive 25% of the profits. More significantly, the Norwegian people risked large amounts of money in exploration and invested even larger amounts in development of the field - the Irish people did not need to.

by billy idle Fri Jan 18, 2008 13:04

Mr D-Head neglects to mention that all Statoil expenses in ireland are written off against tax under the ludicrious terms offered to oil companies by Bertie and his corrupt ex-associates so therefore the Irish state and people lose out on the double.

PS - We really need a BS filter on here to deal with posts from Shell PR

by Chrissie Fri Jan 18, 2008 13:22

WHICH of the Irish people will receive 25%?

by D Fri Jan 18, 2008 14:02

I agree that a "BS filter" is needed, so please read what is written!

Of course expenses in Ireland are written off against tax; tax is paid on profit and, as I have already said above, profit is income less costs. There are a few countries in the world where more than 100% of costs can be deducted against tax, in ALL the others (including Ireland) 100% of costs can be deducted. There is nowhere where less than 100% can be deducted against tax. So the state and the Irish people are not losing out and all of the figures I have quoted here are correct.

At the risk of repeating myself on this site, I have no connection with Shell or any other oil company active in Ireland. I do however have many years experience in the oil industry and I am interested in seeing that the true facts are known and that gross misrepresentations are corrected.

by oilman Fri Jan 18, 2008 15:12

As another oilman of many years experience, and a Mayo resident between hitches, D's is the sole voice of sanity in a discourse populated by semi-literates (ask your mummy or daddy how to use a spell-checker kiddies). I suspect these technical illiterates have never seen a well spudded, could recognise a wellhead, or even identify crude oil if it hit them between the eyes! Their one refrain is "we wuz robbed!" Well, here's a suggestion. Try getting 4 or 5 A+ qualifications in proper subjects like maths, physics, chemistry. There, that's eliminated 95% of you! Then try and get into a proper university, Imperial College London might do, and study 3 years for a good degree in engineering, physics or geology, and follow that with a masters or even a doctorate. Then spend the next 30 years globetrotting, trying to locate, extract, treat and refine the black gold. You may find the real world a little less cosy than the corner of the bars you seemingly occupy, where grievances are nurtured and conspiracies seen through the bottom of a Guinness glass! Remember, government is the problem, not the solution and if we had to depend on those bozo's to find oil and gas, we would end up freezing in the dark. Carry on your educational crusade D, but don't expect too many converts!!

Awlman

by Chrissie Fri Jan 18, 2008 16:28

Qualifications are not required to know that you don't want your homeland ruined, as Ogoniland, Nigeria, has been.

by D Fri Jan 18, 2008 17:07

"Qualifications are not required to know...." Well, they might help to tell you that what is happening in Mayo bears no comparison to Nigeria.

A much more appropriate analogy is the Netherlands, where there are hundreds of gas wells and dozens of onshore gas processing plants; many of them are owned and operated by Shell. The Netherlands is known for its clean air and bulb fields.

by dotsie Fri Jan 18, 2008 17:43

find us a link that shows a reliable source confirming the existence of pipes containing raw untreated gas travelling overland through populated areas in that fine land

by wageslave Fri Jan 18, 2008 17:47

What are the terms from shell for the people of the netherlands on these gas wells?

by EX-pat Fri Jan 18, 2008 18:05

The Netherlands is known for a lot of things but clean air is a new one. This could only be attributed to their use of the bicycles and Belgium’s heavy industry collapsing in the eighties. Also there is no raw gas being piped at high pressure on Dutch soil. Some one is talking through their hole.

by oilman Fri Jan 18, 2008 18:39

Dear ex-pat, you should be aware that NAM land drilled near Slochteren in northern Holland in 1959 and hit one of the worlds biggest gas fields, Groningen, still producing at 27 billion cubic metres/year. There are hundreds of high pressure flowlines, in an area as sparsely populated as, well I don't know, North Mayo maybe? There are numerous gas plants, and the gas is often higher pressure, and certainly more corrosive than projected Corrib gas. I know, I have treated it, wet, high CO2 if that means anything to you. As for clean air, a bracing gale off the North Sea normally ensures superb air quality, bicycles notwithstanding, and the country itself is a model of cleanliness, something we might want to emulate. However, let's not allow the facts to spoil a good bar-room argument. Any comments, or do you have the sense to stop proving your ignorance?

Awlman

by Ex-pat Fri Jan 18, 2008 18:55

Well I stand corrected oilman. But riddle me this; at what bar pressure is the gas piped?

And for the record the Netherlands is not noted for its clean air.

by oilman Fri Jan 18, 2008 20:21

Sorry to keep you hanging, but it is late here in the Middle East and my sidiqqi ran out necessitating urgent re-supply. Now Groningen field initial reservoir pressure was just over 5000 psi, currently 2000 psi, remarkably similar to Corrib pipeline which is limited to 2114 psi (144 bar) Note this is reservoir pressure, not flowline/pipeline pressure, but I remember well over 2500 psi flowlines in Groningen. This is not the point however. Pipelines are designed for a given fluid at given conditions, and I have worked around wet pipelines at nearly 10,000 psi in Mississippi and North Sumatra. All perfectly safe, that's what oilfield engineers and oil companies do. This is why I find it so hard to understand the near hysteria surrounding the Corrib project. Groningen has 29 small processing plants and over 300 wells, been operating for over 40 years without incident, considerably enriching the country. Why can't we do the same?

Awlman

by MacE Sat Jan 19, 2008 06:44

We have been doing, in Munster. You might have noticed a distinct lack of controversy surrounding the Kinsale gas project. To my mind, Norway is an even better role model for responsible management of natural resources, and strangely, it's not even run by rabid bearded communists. Imagine, taking over exploration and processing from private companies. And then, unbelievably, doing it well. Why can't we do the same?

by oilman Sat Jan 19, 2008 07:28

Like the famous advert says, just do it! A word of caution though. Gubbinments cannot run a health service, state policing, airlines, or in fact elect candidates with integrity higher than an organ grinders monkey. In my dealings with national oil companies in maybe 30 countries, the common factors have been incompetence, corruption and national poverty. Think Nigeria, Indonesia, Sudan, Iran, Azerbaijan, any Gulf state, any oil producer in South America, do I have to go on? Beacons of democracy and integrity all, no? While rampant corruption may not occur in Ireland to the same extent, incompetence does and will. Adopt the Norwegian and British model if you so choose, (which actually have little state interference) but do not expect any gubbinment-run oil company to make any significant finds. Remember, a camel is a horse designed by committee! Good luck!!

Awlman

by MacE Sat Jan 19, 2008 11:35

StatoilHydro: the Norwegian government.is its majority shareholder (with 62.5% of shares), and it runs 60% of production in the Norwegian fields. Sounds like a state company to me, and well-run at that. While corruption and incompetence would be possible in a potential Irish equivalent, it would have to be pretty serious to match the state's current system of resource management.

by D Sun Jan 20, 2008 12:05

The problem with state oil companies is not just the potential for incompetence or corruption, it is much more the fact that the Irish people would have to risk € hundreds of millions in exploration costs. There have been something like 150 exploration wells drilled offshore Ireland and only 3 commercial discoveries - if that had all been done by the government they would have lost € many billions, even if they had been just as successful as the private companies.

Statoil is a very special case in that Norway has huge oil and gas potential and the government was therefore able to require oil companies to give 50% or more of their licences to Statoil. That could not work in Ireland because the risk is much higher and the potential much lower. In any case the Norwegians saw companies lose interest under these old rules and they are now much more lenient; as I have already pointed out in this thread, they now make an effective 28% contribution to exploration costs.

by Fearbolg - S2S Sun Jan 20, 2008 13:52

I find it interesting that the Apologists are trying a new tack in their increasingly desperate attempts to pillory and demonise Shell to Sea

and the people of Erris - the pseudo-intellectual "oilman", who's seen it all and points to the occasional typo to highlight how stupid and

ignorant the protestors are, coming as they do from what Shell and Entrprise before them were assured is an area populated by

backward, poorly educated people.

Big mistake.

Oily's condescending and arrogant tone in all his contributions here is absolutely descriptive of the real attitude that the oil executives

have to the various receiving communities. It runs like this:

1. Most of them haven't had my level of education, so they must be stupid (see oily's first comment)

2. Some of them will be greedy little bottom feeders, many of those in positions of minor influence. We'll buy those off for peanuts (in this

case thye're completely right)

3. If they can get some form of meaningful protest off the ground, we'll use our usual Third World approach, i.e a mixture of Police

brutality and intimidation, Right -Wing rants from people like Kevin Myers, a steady stream of misinformation regarding the project and if

all else fails we'll pull one of our pet Ministers out of our pocket to grease the planks at every level.

The above approach has been followed to the letter over the last few years here in Erris and it is a credit and a testament to local people

and the S2S campaign at large that we have managed to survive what has been a very cmprehensive ant concerted onslaught, to the

extent that this project is no further advanced than it was 3 years ago.

The same issues remain: no local consent, serious questions over whatever pipeline route is ultimately chosen, and what about

Glengad?

We're fortunate that, in oilman we have a self professed 'expert in oil matters(by the way, is'nt it significant he's called 'oilman' and

not 'gasman'?), so I'll finish by seeking his 'expert' advice on the Beach Valve at Glengad. Can he tell us please, how this feat of

engineering, which requires pressire of 345bar to be reduced to 144, is going to be achieved? RPS couldn't tell me and neither could J.P

Kenny. No doubt the man with the degree will be able to enlighten us. By the way. I didn't use spell checker on this, so correct away.

by MacE Sun Jan 20, 2008 15:16

D, a chara, you've got to spend hundreds of millions to make billions in this game. No-one's going to give it you on a plate. I don't reckon Norway's a special case, and nor do the Norwegians; they offered to help Ireland to set up an Irish Statoil in the 70s. The reason we don't have one is not fear of incompetence and corruption, but actual incompetence and corruption.

by map reader Sun Jan 20, 2008 19:42

Clicking on the link above brings you to a map.

Whatever about arguments about pressure etc, doesn't this map strongly imply that the gas from Serica's block is intended to be refined at Bellanaboy?

It looks pretty clear to me that Serica intend for their gas to be refined there as well.

So those who fear that Shell's scheme is "the first foot in the door" to turning Erris into a hub for oil and gas refining certainly look vindicated by Serica's own website.

They pprobably figure that once Shell have sorted out a pipeline it will be easy for them to get planning permission for a second one, as it will be a 'Brownfield Site".

by wageslave Mon Jan 21, 2008 03:58

......believing that all that extra forestry land we gave away to shell was a miscalculation. I guess somebody was thinking ahead! And thinking ahead indicates awareness and complicity rather than helplessness, incompetence and ignorance.

by IT Reader Mon Jan 21, 2008 14:36

Serica in $30m Irish drilling plan

The Irish Times - Monday, January 21, 2008

- Ciarán Hancock, Business Affairs Correspondent

UK-based Serica Energy is hoping to begin a $30 million exploration drilling programme at its gas prospects in the Slyne Basin off the west coast of Ireland.

"We hope to drill it this year," Serica's chief executive Paul Ellis told The Irish Times . "It's a question of getting rigs and sorting out a few other technical issues. [Because of the difficult Atlantic weather] we can only drill there in the summer."

Serica secured rights to the Slyne blocks in the last licensing round in 2006. It is situated about 50km from the Corrib field, which has been the subject of much controversy between Shell and locals in Co Mayo.

Serica is considering drilling two wells over a 60-day period during the summer.

Mr Ellis said the company would probably bring in rigs from the North Sea. With oil hovering around the $100 a barrel mark, rigs are in high demand among exploration companies, pushing up their cost.

As a result, Mr Ellis said the company would probably incur costs of about $500,000 a day for its Irish drilling programme.

"We are taking a risk, which is what you do as exploration companies," he said. "These are wildcat exploration wells but they are potentially large, which is why we like them."

Mr Ellis said 3D seismic data suggests that its gas prospect could be as large as the Corrib field, which has reserves of about a trillion cubic feet of gas.

Serica has indicated that it could seek a "farm-in" partner for the project.

Serica was formed in 2000. It listed in Canada four years later and on the Alternative Investment Market in London in 2005.

It recently raised $52 million to fund exploration activities and secured a $100 million debt facility from JP Morgan and Bank of Scotland. It is also considering drilling in Vietnam.

Serica is due to begin production at its Kambuna gas field in offshore Indonesia in late 2008. This would be its first production of oil or gas. It has a 65 per cent interest in the Kambuna field and has signed a deal to sell the majority of gas there to the Indonesian state electricity company.