The world’s next multi-billion barrel oil discoveries could potentially be found off the coast of Ireland, according to research specialist Alliance Bernstein.
Analyst Oswald Clint says that the waters off Ireland’s coast are under-explored, while technologies and techniques have advanced rapidly since the majority of historical work took place (prior to 1990).
“Irish-focused E&Ps believe regional under-exploration is historically due to low oil price economics rather than technical reasons,” he said.
The encouraging write-up highlights that several smaller exploration and production companies are highly leveraged in the Irish ‘frontier’, as well as larger firms like Repsol, ENI and US major ExxonMobil.
Ireland, a fledgling oil region, was just one of the frontiers highlighted by Clint in the report.
The report examined the connections and similarities between different geographical locations either side of the Atlantic, ones with known discoveries and others that are under-explored.
It looked at regions that are conjugates, or analogies, of one another. In simple terms this refers to areas that are believed to have been connected millions of years ago before the continents, as we know them today, were formed.
The idea is that oil firms can reduce exploration risks by taking the knowledge and expertise gleaned from one frontier region and applying them to another, which are believed to have the same origin.
“Analogies to existing hydrocarbon discoveries, we believe, will help propel offshore exploration into new frontiers,” Clint said.
“Specifically, conjugate basins are those that used to lie ‘back to back’ in the Earth's tectonic history and have since rifted far apart. We believe the industry is increasingly employing conjugates and analogies to move from ‘frontier to frontier’ in new exploration.”
Much of the focus is on the similarities between the geologies either side of the South Atlantic.
And the success of the Zaedyus exploration well, which has been dubbed the world’s longest ‘step-out’ well, is a notable example of the value that can be added with this exploration concept.
Zaedyus was drilled in a Shell-led consortium which included Tullow Oil, and it targeted the same type of reservoirs that host Tullow’s vast Jubliee discovery offshore Ghana.
The findings confirmed the exploration concept and outlined an estimated 1 billion barrels of (potentially) recoverable oil. Tullow is now thought to have a total of 20 prospects and leads in the area.
Rockhopper Exploration (LON:RKH), through its recent tie-up with Premier Oil, hopes to follow its success in the Falklands – where it unearthed the Sea Lion discovery – with a campaign of Africa’s South West coast.
The newly formed partnership believes the waters off South Africa and Namibia may host conjugates of the systems encountered near the islands in the South Atlantic.
Meanwhile, it is also thought that the same concepts could potentially apply to prospects either side of the North Atlantic – though the moratorium on drilling off America’s east coast means it is harder to evaluate.
It is the similarities across the North Atlantic that provides the high impact potential offshore Ireland.
Specifically the Jeanne D'Arc basin in Canada is now being compared with the Porcupine basin, off Ireland’s south west coast.
Jeanne D'Arc hosts ExxonMobile’s - perhaps prophetically named - Hibernia field. The large 1.3 bln barrel field famously has the largest oil platform in the industry and has single wells that yield 50,000 barrels of oil each day.
And next year Exxon is set to drill the hotly anticipated Dunquin exploration well, alongside partners ENI, Repsol and AIM quoted Providence Resources (LON:PVR).
Earlier this year Providence put Ireland’s fledgling oil industry on the map with its appraisal success of the Barryroe field in the Celtic Sea.
Barryroe, estimated to contain 2 bln barrels oil-in-place, is now poised to become Ireland’s first commercial oil field and Providence is now looking to bring in a development partner.
Meanwhile Providence’s Drombeg prospect is also described by Clint as a ‘potentially oily Jubilee analogue’.
Fellow AIM-quoted explorers Fastnet Oil & Gas (LON:FAST) and Petrel Resources (LON:PET) also have potentially exciting acreage in Irish waters.
“Many companies are highlighting billion barrels oil equivalent prospectivity at the Irish frontier,” Clint said.
“This is what we like to see in frontier exploration and what justifies the risk.”
In the Celtic Sea, near Barryroe, Fastnet has two licences - in the Molly Malone and Mizzen Basins.
An independent report in July estimated the two areas could contain a colossal unrisked 15 billion barrels of oil, though the company admits a lot of work is still needed to prove up the project and find the best drilling targets.
Its expects to be awarded two more licences in the region and will aim to sell an interest in the four-licence package next year to a major to carry out an extensive 3-D seismic.
By. Jamie Ashcroft