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State trawls for increase in offshore licences

Nicola Cooke - Sunday Business Post

The Irish Offshore Operators Association (IOOA) anticipates increased interest in the latest round of applications for gas and oil exploration off the Irish coast, which closes on Tuesday.

Gas and oil exploration companies will apply for new authorisations in the Atlantic Margin off the west coast, from Donegal to Kerry.

The round is the largest to date and includes all of Ireland’s major Atlantic basins, a quarter of a million square kilometres, extending from about 30 to 380 kilometres from shore, with water depths ranging from 200 metres to over 300 metres.

In the last round, two years ago, there were only two applications for licences, both of which were granted. In an attempt to encourage further applications this time, the Department of the Marine and Energy changed the conditions of the licences to allow companies to participate in developing areas ‘‘without having to contend with the more costly up-front commitments usually associated with exploration licences’’.

This means companies can assess the potential of their acreage and generate prospects and leads before deciding whether to progress to a ‘‘full frontier’’ exploration licence. IOOA chairman Fergus Cahill said 350 exploration companies were drilling off Britain at any one time, and Ireland should try to replicate this.

‘‘The 2009 round was a disaster," he said. ‘‘Every exploration company in the world is in Britain because it is very easy to develop a find there.

The typical time from discovery to production is two years. The structure of our planning and permit system here is too complex, and the length of time it is taking the Corrib project to get into production has not helped.

‘‘Exploration has been unsuccessful here because of the perception in the industry that there is a hostile environment to it, and people harp on about the state losing profits on it, when the tax is in fact 25 to 40 per cent.

This is commensurate with the level of risk companies take to come here to do an exploration.

A single well off the west coast can cost €70 million; the Atlantic is very exposed and there is little or no infrastructure here to cater for these explorations."

Cahill said he welcomed energy minister Pat Rabbitte’s statement on the issue last month, and described it as ‘‘a step in the right direction’’.

The minister said Ireland needed ‘‘more exploration for oil and gas, not less’’ and the country needed ‘‘more discoveries like the Corrib gas field’’.

He said that, without an increase in exploration, Ireland would not benefit from its indigenous natural resources.

Posted Date: 
30 May 2011