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Happy St. Patrick’s Day! Ireland Strikes Oil

After more than three and one half years of brutal recession that stopped the Celtic Tiger in its tracks, the Irish finally have something to celebrate.

On 15 March Irish-based Providence Resources PLC announced that it had drilled a commercially viable oil well at its Barryroe licensing block, roughly 30 miles off the coast of Cork. The test well findings suggested the field could yield more than 3,500 barrels of oil a day, nearly double the 1,800 barrels needed to make the venture commercially viable. The test area off the Cork coast covered 116 square miles, which according to Providence Resources PLC, is equivalent to a medium-to-large North Sea oil field.

Providence Resources PLC CEO Tony O’Reilly announced, “We are pleased to report flow rates of 3,514 BOPD which materially exceed our stated pre-drill target of 1,800 BOPD. The well has also confirmed that the basal sands are laterally continuous, highly productive and that the oils are of a very high quality. Our comprehensive wire-line logging program has revealed the seismic signature of the basal sands and can therefore be used to map these intervals directly in the 3D seismic volume for field volumetric determinations and sidetrack well planning. The most recent development planning carried out by RPS Energy cites the use of high angle oil production wells, which should provide significant incremental production potential over this simple vertical well. Given that we only assumed operatorship of Barryroe in late 2010, I would like to pay tribute to all of the team members who have helped to deliver such a successful outcome to this program (site survey, 3D acquisition/processing, rig procurement, drilling & testing) within such a challenging 15 month timeline.”

O'Reilly added that Providence Resources PLC's findings mean that the company is likely to upgrade its estimate of the amount of recoverable oil in Barryroe from its current level of 60 million barrels and with an eye to potential investors said, “I think this discovery also creates a reappraisal in the minds of global oil corporations about coming back to Irish waters to drill for oil.”

Following Providence Resources PLC's Barryroe find announcement, its shares surged almost 20 percent.

If anything O’Reilly’s cautious optimism seems too modest. Providence Resources PLC’s 48/24-10z Barryroe appraisal well is located in waters roughly 300 feet deep in Standard Exploration License (SEL) 1/11 in the North Celtic Sea Basin. Providence Resources PLC, which owns 80 percent of the concession, operates SEL 1/11 on behalf of its partner Lansdowne Oil and Gas PLC, which owns the other outstanding 20 percent.

The Barryroe well could prove to be the tip of Providence Resources PLC’s exploration and production activities, two years ago, a third party audit carried out by RPS Energy for Lansdowne Oil and Gas PLC, before it partnered with Providence Resources PLC,
indicated combined Middle and Lower Wealden P50 and P10 STOIIP estimates for Barryroe of 373 million barrels of oil (mmbo) and 893 mmbo, respectively. The corresponding 2C and 3C Barryroe technically recoverable contingent resources were estimated at 59 mmbo and 144 mmbo, respectively.

Accordingly, in 2011, Providence Resources PLC signed a Memorandum of Agreement with Shell Trading and Marketing under which it would undertake an oil off-take arrangement for future Barryroe oil production.

For those with a sense of irony, the Barryroe field is one of a number of discoveries made in the 1970s and 1980s but which were deemed to be too small to be developed economically, given the then low prices of crude.

It is one thing to have a successful test well, quite another to develop an entire field. Last year Providence Resources PLC announced plans to invest with its partners more than $500 million in drilling of a number of exploration and development wells in six different basins offshore Ireland, of which Barryroe has proven its first success. This multi-year program represents the largest drilling campaign ever carried out offshore Ireland. Given the parlous state of the Irish economy, one can only wish them success.

By. John C.K. Daly of Oilprice.com




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