OilVoice - Providence Searching For Irish Upstream Drilling Partner

Providence Searching For Irish Upstream Drilling Partner

Friday, April 16, 2010

Ireland's Providence Resources is reported to be scouting for new partners to bring in to help develop its upstream acreage off the coast of southern Ireland. However, following a string of disappointing exploration and discovery attempts by firms in the region, Providence's chances of finding a partner will depend largely upon the flow of positive data from the exploration campaign.

The Dublin-based firm is believed to be looking for partners to aid the development of around 1.5 billion barrels of crude oil offshore. However, Providence's success at the project is inextricably linked to the price of oil. The firm has forecast that an oil price of around $40 a barrel, or higher, was necessary to make investment in the area commercially feasible.

In a separate move by the company, Providence is also looking to sign up new partners to its acreage off Ireland's western coast, in a region where the firm has recently undergone 3D seismic exploration surveys. Drilling could begin at the so-called Spanish Point area by as early as the 2010 year end. The project has the potential to yield as much as 120,000 barrels per day (bpd).

Although Ireland sits in close proximity to the large oil and gas consumer markets in the EU, investment in its own industry has become something of a regional laggard. In fact, only 160 wells have been drilled in Irish territory over the last 40 years. This pales in compared with over 10,000 which have been drilled in the neighbouring United Kingdom.

It seems the lack of sizeable discoveries has deterred potential investors. However, this is not to say that any overseas majors have not gotten involved at all. US major ExxonMobil farmed in to Providence's FEL3/04 licence in 2006, while others including Malaysia's Petronas - which disposed of its 40% stake in the Kinsale Head area, to Providence in December of last year - have now reduced their exposure. The Irish government will no doubt be hoping that Exxon's presence in the offshore West of Ireland acreage serves as a blueprint for others to invest. However at present, a great deal will depend on the drilling results of Providence's exploration in the region.

While Providence's only producing asset in Ireland is the Kinsale gas field, the firm also holds exploration licences in other surrounding areas, namely the Celtic Sea, St George's Channel, Ireland's frontier Atlantic area and the East Irish Sea.