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Providence to start 12-well programme off Irish coast in 2011

Thomas Molloy - Irish Independent

[Shell to Sea] Please be advised that the Irish Independent is controlled by Tony O Reilly, who also owns oil & gas exploration company Providence Resources.

PROVIDENCE Resources, the largest oil exploration company focused on Ireland, outlined an ambitious drilling programme for 2011 as well as the company's fields in the UK and the Gulf of Mexico.

Providence said yesterday that it will begin a 12-well drilling programme in six potential oil fields off the Irish coast this year. Those fields include a field off Dublin known as the Dalkey Island Oil Prospect and other fields off Dunquin and Rathlin Island. Providence will also carry out further tests for oil and gas off Hook Head, Spanish Point and two other sites.

Outside Ireland, Providence plans to double production at its onshore Singleton field and extend drilling in the Gulf of Mexico.

"The upside potential in the diversified operational campaign will make it hard to ignore the stock as drilling draws closer," said Davy Stockbrokers analyst Caren Crowley. "The target inventory is an attractive mix of high impact, frontier wells such as that on the Dunquin gas prospect on the Atlantic Margin and material, near-term development opportunities such as the Spanish Point gas condensate discovery," she added.

Providence has spent the last few years searching for oil through seismic surveys, assembling teams to drill wells with blue chip partner companies such while also raising the money needed to extract oil from the seabed.

Chief executive Tony O'Reilly said next year "and beyond is all about drilling and we are expecting significant activity in our three operational areas of the United Kingdom, the Gulf of Mexico and, most importantly, offshore Ireland.

"This not only represents the largest drilling programme in our history but it will also be the largest co-ordinated multi-basin drilling programme carried out offshore Ireland."

Some of the wells, such as an appraisal of Hook Head, may be drilled next year and at no cost to Providence. Other wells, such as the Barryroe oil discovery located beneath the Seven Heads gas field, will require the company to buy seismic data prior to drilling.

'Further partner affiliations' will be assessed in 2011, and such partnership agreements could reduce Providence's cost exposure as well as progress asset development.

Providence is also benefitting from rising oil prices which make extracting oil in unusual places more profitable. Oil prices resumed their rally yesterday after hitting fresh two-year highs earlier his week as the US hiked its economic growth figures and oil stockpiles fell. US crude rose 20 cents to $90.68 a barrel, while Brent North Sea crude was up 14 cents to $93.79.

- Thomas Molloy