Looking for Ireland's Jubilee

July 16, 2014

Atwood Oceanic’s Atwood Achiever drillship, nearing completion at Daewoo Shipbuilding and Marine Engineering’s yard in Korea. Photo from Atwood Oceanics.

Exploration offshore Ireland has yet to bear significant fruit – could new ideas finally create the oil rush the region has been waiting for? Elaine Maslin takes a look.

"We are looking for the next Jubilee," Europa Oil and Gas CEO Huch Mackay told the 2nd annual Ireland Oil & Gas Summit in Dublin, early June.

Jubilee, a 600MMbbl field offshore Ghana, was a company-maker for Kosmos Energy and Tullow Oil when it was dis- covered in 2008 and brought onstream by 2011, in a fast track development.

Kosmos is now in Ireland, and Europa, one of its partners, sees similar potential in the Irish Atlantic Margin’s southern Porcupine basin, based on the same play tapped by Kosmos in West Africa. Companies are also comparing features in the basin to plays offshore eastern Canada, including the Flemish Pass, where Statoil and Husky Energy have made giant finds, such as the 300- 600MMbbl recoverable Bay du Nord discovery.

Kosmos and Europa see significant potential—others see it too. Kosmos, Cairn Energy, and Australia’s Woodside, were new entrants to the basin last year, fol- lowing the Atlantic margin-opening 2011 Licensing Round. They join a fleet of minnows, including Europa, Providence Resources, and Petrel Resources, as well as Statoil, Shell and Petronas, all hunting for Atlantic margin elephants.

Exploration to date

There is a lot of acreage to go for. Offshore Ireland is six times the size of the North Sea and its Atlantic margin area alone has a 10 billion boe yet-to-find reserves potential, Providence Resources' CEO Tony O'REilly told the Ireland summit.

To date, however, there has been limited exploration success. There are numerous sedimentary basins, but only about 5% of them have been explored and 10% studied, David Horgan, managing director of Petrel Resources, told the same audience.

A total of 158 wells (130 exploration and 28 appraisal) have been drilled over the last 50 years, mostly in the 1970s and 1980s, and mostly in the Irish Sea, says Ciaran Ó hÓbáin, principle officer of the Petroleum Affairs Division, department of Communication, Energy 

and Natural Resources and Environment of the Republic of Ireland. Just 31 wells have been drilled in the Porcupine basin, and none in the Rockall basin.

There have been a handful of oil finds, but most have been classified uncommercial, according to government definitions. These include Burren (1978), Connemara (1979), and Spanish Point (1981), in the Porcupine basin.

Interest in the Porcupine basin peaked in July last year, when Dunquin North was drilled by Exxon Mobil, using the Eirik Raude semisubmersible. The US$200 million well—the only southern Porcupine well in 12 years—is reported to have found oil shows in a lower Cretaceous carbonate reservoir. This find proves source rock exists, potentially from the late Jurassic superhighway, connecting Newfoundland and Nova Scotia with the Atlantic margin, accord- ing to Mackay. But the find was not commercial.

Barryroe is a lower Cretaceous find in the North Celtic Sea basin

70km offshore in 80m water depth. It is Ireland’s only commercial oil discovery, with an estimated >300MMboe 2C recoverable resources. Operator Providence Resources is seeking a partner to help develop Barryroe.

Production

To date, there have been three commercial gas discoveries (Corrib, Ballycotton, Kinsale Head/Seven Heads). Kinsale/ Seven Heads have been producing in the Celtic Sea since the 1970s using two platforms, with Ballycotton tied in during 1991. Corrib, an 83km tie-back to shore in 350m water depth, in the Atlantic, should finally come on stream, producing 58MMcf/d at peak, in 1H 2015.

Irish offshore concession map, March 2014.Map from the Department of Communications, Energy and Natural Resources, Republic of Ireland.

A turning point

The 2011 licensing round has been viewed as a turning point for the basin, opening for the first time the entire Atlantic, extending from about 30-380km offshore, in 200-3000m water depths. Fifty-three full blocks and 11 partial blocks, under 13 licenses were issued, to: Antrim Energy, Bluestack Energy, Europa, Petrel, Providence, San Leon Energy, Serica Energy, and Two Seas Oil & Gas.

New, bigger, entrants then farmed-in to the basin as operators: Kosmos (taking three licenses, through farm-ins with Europa and Antrim Energy) Cairn (3), and Woodside (4).

Licenses are issued as two-year license options, with no minimum work commitments, which can be converted into exploration licenses. The Celtic Sea Open Area is open for applications at any time.

Following the 2011 Round, seismic acquisition activity increased, following a 15-year lull. Ó hÓbáin says 13,000km 2D lines and 8000sq km 3D was shot last year, including a 5000sq km 3D survey by Kosmos in July-October, now being used to build a prospect inventory, on which the firm can make its 2016-17 drilling decisions. More is planned this year. Polarcus, with GeoPartners and Ion GeoVentures will be shooting a minimum 4300sq km of 3D multi-client seismic, covering the southern Porcupine basin this year.

A major, Irish government-led 2D regional survey covering 10,000km using the BGP Explorer will also be shot over the Atlantic margin.

Porcupine play untested

Much focus is on the 60,000sq km Porcupine basin. Here, just 31 wells have been drilled since 1977, mainly by companies that have long since left the basin, due to lack of early success, Mackay says.

Europa is encouraged by the latest 3D data on the southern Porcupine basin. “We are very excited about what we are seeing,” he said in Dunline, adding that there is the potential for 50-100sq km aerial extent turbidite sandstone submarine fans.

“We think there are Cretaceous turbidite fans in the southern Porcupine basin. It is an exciting new play... with the potential to hold hundreds of millions of barrels of reserves. This play has not been tested offshore Ireland yet. If it is successful we will see a complete transformation of the industry.”

Kosmos has the tools to test the theory.

It has a three-year contract, starting this year, to use Atwood Oceanic’s drillship Atwood Achiever, being completed in Korea by Daewoo Shipbuilding and Marine Engineering, with plans to drill offshore Ireland in 2016-2017.

Dunquin data key

Despite Dunquin North’s lack of commerciality, Providence, which has a 16% stake in Dunquin, says it provided valuable data. “It (Dunquin North) was the first well in an area the size of the North Sea, so it is hugely important,” O’Reilly says. “It wasn’t commercial, but it provides a huge data point on this vast and unexplored deepwater basin.”

The well data have increased Providence’s confidence in its Drombeg prospect (80% equity), which lies 60km southwest of Dunquin. Drombeg is a lower Cretaceous stratigraphic prospect, interpreted to be a deepwater turbidite fan system, and an estimated 3 billion bbl (P50) of oil in place, according to John O’Sullivan, Providence’s technical director.

Lying in about 2.5km water depth, about 220km offshore, Drombeg has a mapped aerial extent of about 270sq km, making the Drombeg fan larger than the giant North Sea Forties field. O’Sullivan says it could contain a gassy oil, with perhaps 900MMbbl recoverable and additional potential in vertically stacked Jurassic and Paleocene stratigraphic intervals.

There is also further prospectively at Dunquin, specifically Dunquin South, O’Reilly says, given the thick, over-pressured, high-porosity, carbonate reservoir system proven in the Dunquin North well.

Past problems resolved

With such potential, why have no significant finds been made to date? O’Reilly says the industry previously foundered due to lack of infrastructure and accessible market.

Kinsale, brought online in the 1978, saw some infrastructure installed, on and offshore, and there is now a market for the gas in Ireland, as well as infrastructure to export it, and to land and process oil. Corrib will also bring infrastructure opportunities in the North Porcupine basin.

Mackay says the early explorers’ lack of success was because they were using a Brent province geological model and the constraints of 2D seismic, and drilling rigs were unable to drill in more than 500m water depths.

There was also an assumption that the region was gas prone, making it less attractive, a view which the Barryroe discovery, successfully appraised by Providence in 2012, helped start to change. “Barryroe is important because it has probably altered the perception that Ireland is all about gas,” O’Reilly says.

Barryroe

A milestone will be reached when a development concept and funding is announced for Barryroe, paving the way for commercial oil production.

Discovered in the 1970s by Marathon, Barryroe wasn’t pursued due to high state participation (50% pre-1992) and an unfavorable tax regime. The oil was also waxy, which at the time had technical and economic implications, both of which are no longer a problem, O’Reilly says.

Providence is currently planning a phased development, with early production, of about 30,000bbl/d, on the eastern part of the field where most data is avail- able, using a small wellhead platform and floating storage and offloading vessel. The development would then move to the west of the field, and additional infra- structure, with a nominal name plate of 100,000bbl/d, installed, subject to regulatory approvals. The first phase development could make use of the Seven Head manifold, which sits over Barryroe, and would be able to transport associated gas via the Kinsale infrastructure (two plat- forms with a pipeline to shore).

For Providence it has been a long, 30 year journey. Over 25 years, it has spent $750 million with partners exploring the Irish offshore. Over the last five years it has spent another $500 million.

The spending will continue. Work is ongoing to assess the potential to develop Spanish Point, a gas and condensate find in the northern Porcupine basin. Cairn (operator with 32% equity) is planning to drill an appraisal well on Spanish Point this year, based on new 3D data, using the Blackford Dolphin semisubmersible, which recently underwent a major renovation at Belfast’s Harland & Wolff ship- yard. “It will be the first big well west of Ireland in many years,” O’Reilly says.

A critical stage

Going to press, the Irish Government launched the 2015 Atlantic Margin Oil and Gas Licensing Round, which closes September 2015. It also increased the tax on production profits to a maximum 55% (up from 40% now), and said future tax rates would be on a field by field basis. Producers will still pay 25% corporation tax. “We are at a critical stage, it’ll be interesting to see what happens,” says Cahill.