The Kylemore prospect lies 20km south west of the well-known Corrib gas field, to which it is structurally similar. Corrib itself is around 80km off Erris Head near Belmullet.
Initial studies estimate that Kylemore could contain up to 228bn cubic feet of gas in place.
The second gas prospect is the Shannon prospect, which is located 10km south of Corrib. Enterprise Oil drilled a well on the prospect in 1999, but did not encounter the Corrib reservoir.
Providence Resources, whose CEO is Sir Tony O'Reilly last month discovered oil in much greater quantities than expected off Cork, was awarded the rights to the area off during last year's Atlantic Margin licensing round that was run by the Government.
In a statement, Providence technical director John O'Sullivan commented: “Initial work on our new acreage in the Slyne Basin has demonstrated exciting gas potential.
"We plan to apply modern seismic processing technologies to the available 3D seismic data in order to better quantify any remaining resource potential in the area.
"This is Providence’s first licence authorisation in the area and we are delighted to be working on the project with First Oil, the largest UK privately owned North Sea oil and gas producer.”