Europe has remained in the global forefront when it comes to willingly ceasing hydrocarbon exploration and extraction, fueled by a tangible political intent to make its energy mix greener and more sustainable. The Netherlands have committed to a calibrated scaling-back of the Groningen field in particular and the majority of their gas industry in general, Norway is fighting a prolonged battle to unlock its Arctic fields in the Barents Sea, yet Ireland might be the first Atlantic producer to quit both oil and gas altogether. Heretofore the Emerald Isle has had good chances of keeping its gas assets alive and in reasonably good health, from now on the odds are that future gas exploration will also go down the way of oil.
Exploration on the continental shelf of the North Sea was launched at least a generation later than in other leading hydrocarbon basins of the 20th century – first the Netherlands learned by the early 1960s to appreciate its supergiant Groningen gas field which albeit an onshore one, kickstarted an exploration drive in the North Sea. One needn’t have waited much for the first offshore success stories in terms of oil as the United Kingdom reported its first offshore oil discovery in 1965, Norway followed up in 1967. Farther off from the most-prolific Central and South Viking Grabens, Ireland failed to join the drilling drive as all exploration wells it spudded turned out to be uncommercial. The only bright spot came in the form of the Kinsale Head gas field, coming onstream in 1978, yet even this positive development was followed by 20 years of complete exploratory lull.
It was only in 2001 that the next Irish offshore discovery, the 1 TCf Corrib gas field was declared commercial, nurturing hopes that there might be more waiting to be located. This claim was fortified by the reasonably low number of exploration and appraisal wells spudded, up to the present day there have been only around 170. Yet even the sole task of commissioning Corrib was almost too difficult to carry out – popular protests, voicing opposition to the project’s impact on marine biodiversity as well as the suitability of the proposed pipeline route as well as repetitive calls to have the gas treatment facility at sea and not onshore, have almost forced the new operator Shell to mothball the offshore asset (which is located some 80km from the Irish coast). Related: The Oil Major With The Most COVID-19 Deaths
Graph 1. Ireland’s Gas Supply Matrix in 2000-2019 (billion cubic feet per year).
Source: BP Statistical Survey 2020, SEAI.
Ireland’s main political parties Fianna Fail and Fine Gael have finally formed a coalition government with the Green Party, ending almost five months of intense negotiations on the composition and policies of the next government. The coalition has stated last week that new licenses for gas exploration would be eliminated the same way oil exploration was wound down. The irony of the story is that less than a year ago, Ireland’s Taoiseach Leo Varadkar stated at the UN Assembly in September that his country would end the practice of drilling for oil, based on recommendations from the independent Climate Change Advisory Council. Yet at the same time Varadkar pointed out that “exploration for natural gas should continue”, seeing it as a necessary transition fuel towards a greener future. Ireland is still without any commercial oil discovery, explaining to a great deal why oil had become such an easy thorn to remove back then. Related: Tesla’s Million-Mile Battery Will Fuel A New Green Energy Boom
Despite the Corrib gas field peaking a mere two years after its startup in December 2015, bringing new gas-pertinent exploration licenses to a close will deprive Irish customers of domestically sourced energy and would inevitably render Ireland more dependent on the United Kingdom which will most probably continue to function as an energy bridge for the Emerald Isle. Hypothetically, Ireland might also become an LNG consumer, were it not for the Irish populace similarly resenting the idea of importing fracked US gas (fracking remains to be banned in Ireland). Shannon LNG, first proposed as early as 2003 and part of the European Union’s Projects of Common Interest, remains in an embryonic phase due to popular hostility to the idea thereof. There have been two other LNG projects proposed, Inisfree LNG and a yet unnamed FSRU LNG project, but both remain in their rudimentary stages.
The banning of virtually all future hydrocarbon exploration did not go down that well with the Irish industry, who have lamented that such a decision would limit Ireland’s self-sufficiency (Corrib has generated 50-60% of the country’s needs at its peak in 2017-2018). Ireland would not become greener by default in the short-to-mid term, especially considering the tangible growth natural gas has been demonstrating throughout the past two decades. In fact, gas has been the only hydrocarbon to increase in both nominal and absolute terms in the last 20 years, increasing on average 2% year-on-year. Natural gas now accounts for 52-53% of electricity generation in Ireland, a substantial increase from the average rate of 40% in the 2000s.
Obviously enough, the decision has also triggered a response from companies active in Ireland’s offshore. Following the Corrib gas discovery there have been several promising discoveries in and around the same field – the 1.2 TCf Edge and 1.5 TCf Inishkea prospects were lauded at the time as potential replacements for Corrib which peaked at the 2-3rd year of production and would be most probably decommissioned before 2030. These prospects will remain in the game as the prospective ban would only involve future licenses and not currently existing ones. Very fittingly to the suggested future license ban, the Kinsale gas field has stopped producing gas altogether almost simultaneously to the decision. All things considered, one should expect further relinquishments and exploratory activity in Ireland to be even tamer than up to now.
By Viktor Katona for Oilprice.com
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