Oil found off west coast of Ireland

Saturday July 18, 2009 14:35

by AM

CEO says: They are attractive partly due to the tax rate in Ireland

Serica, the British energy company, has found oil in the Slyne basin, off the west coast of Ireland.

Under current licencing agreements, all oil found in Irish waters will belong exclusively to the finder, with no royalty payable to the people of Ireland. All exploration and development costs will be claimed back before tax is paid. Minor changes to the licencing terms, brought in by Eamon Ryan in 2007, won't apply to this find.

In a Reuter's interview last year, Paul Ellis, the company's chief executive, said of the Irish exploration: "They are look-a-like prospects to Shell's Corrib prospects, and are attractive partly due to the tax rate in Ireland."

This Serica map shows their licenced blocks, and (oddly) shows the Corrib pipeline in place.

Serica Energy has found oil with its first exploration wellin the same Sherwood sandstones which are the source of Shell’s Corrib gas field to the north.

According to Serica, it was also the first oil find anywhere off western Ireland for nearly 30 years. The company's chief executive Paul Ellis said: “This is the first oil discovery west of Ireland for nearly 30 years," (That really depends on how far west you go, Paul.)

The licence, with a 15-year exploration term covering three blocks, 27/4, part of 27/5, and 27/9, was granted in December 2006. Serica is the licence operator with 50%, and the remaining 50% interest is held by German company RWE Dea.

The licence terms for oil and gas exploration were changed by the government in 2007 to make them very slightly less attractive to energy companies from a taxation point of view, but this find will be on the same terms (now widely known as the "Burke/Ahern Deal") as Shell got for Corrib. So don't get too fired up, none of the money from this oil find will be spent in your hospital or school.

Mr Ellis though, is very excited about the potential for his company. He said: “Serica's 600 square kilometre licence area contains several prospects and we shall now be evaluating them as potential drilling targets. Although much more work needs to be done before the commercial potential of the discovery and the rest of the licence can be established, the Bandon oil discovery could mark the beginning of an exciting phase of Irish exploration.”

Exciting for the investors in Serica, and also for the farmers and fishermen of the west coast, who might find being thrown in ditches, arrested, and being sent to prison exciting, since Serica may well try to use existing onshore infrastructure for processing the find. They certainly shouldn't get excited about any of the profits from Irish natural resources being used to invest in renewable energy for the future, of even to pay off the country's debts. For that you'd need the Green Party in government...

In a strange twist to this story, Fergus Cahill, who speaks for the Irish offshore operators association (and, many say, writes Eamon Ryan's press releases for him) has been issuing statements on how difficult it is to get energy companies to explore off the west coast.

He even wrote a column in the Irish Times on June 26th saying the prospects for oil finds were poor and we should be grateful anyone at all was willing to come along and help us find our resources (and keep them of course). This is at the very time that Paul Ellis was saying how exciting it all was.

Strange that the Irish Times didn't quote Paul Ellis, or even make much of the announcement of the first discovery of oil in Irish waters for thirty years. Maybe Paul should ring Fergus and tell him that things aren't so bad, and then Fergus could write another article explaining how in this exciting time for oil exploration in Irish waters, the government needs to keep giving away Irish resources to the energy companies. Maybe.

http://offshore-mag.com/index/article-display/610947079....html

http://www.cnw.ca/fr/releases/archive/June2009/25/c9904....html

http://www.offshore247.com/news/art.aspx?id=13944

http://www.irishtimes.com/newspaper/opinion/2009/0626/1....html

http://www.independent.ie/business/irish/supremo-to-ove....html