Black Gold In Ireland? MindThe Eco Warriors, Though.

11 November 2012

Ireland’s troubled economy received a jolt of hope last month with the news that an oil field off the achingly beautiful coast of West Cork may contain as much as 1.7 billion barrels of oil, with 280 million barrels of that recoverable in the short term at a rate of 100,000 barrels a day, That’s more than the entire country consumes and you would think “Eureka!” is the word. But few are doing cartwheels just yet, given the legacy of futility that has plagued Irish offshore resource exploration for decades.

Experts are convinced that the ocean floor around Ireland contains huge reservoirs of natural gas and oil, with total oil reserves potentially in the neighborhood of 10 billion barrels of oil or gas, just around this corner of the land where I live. But Norway Ireland isn’t. The country’s Atlantic shores face fierce seas, infrastructure remains patchy, and years of protests have beleaguered the efforts of Royal Dutch Shell and its affiliates Statoil and Vermilion Energy to bring their Corrib gas field on tap.

Providence Resources, the Dublin based company behind the new Cork discovery, hopes its Barryroe field may turn this around. Providence is run by Tony O’Reilly, Jr., son of the Irish magnate of the same name who was the former CEO of Heinz and builder of the Independent News & Media group, sold in 2010 to the Russian oligarch Alexander Lebedev. O’Reilly Junior was talking Norway last month. “From an Irish perspective, here we have no oil industry. This really heralds the beginning of the industry.”

Indeed, Ireland burned 142,000 barrels of oil a day in 2011 at a cost hovering around $8 agallon, or 18^th highest in the world.  But it produces not a drop of it. The country’s rebellious nature has not helped this scary equation.

The Shell consortium’s attempt to bring forward the Corrib gas field off County Mayo has been stymied for years by a determined but relatively small consortium of local protesters and hard-core attention-craving eco-warriors who call themselves “Shell to Sea.”

So deep in the national psyche are the hated memories of British truncheons, Irish authorities struggle to find a proper balance in controlling the smallest crowds run amuck. In 2003 an emigree named Mary Kelly broke into a Shannon airport hanger and smashed with eco outrage with a hammer away at a US Navy transport plane en route to Iraq. A few days later she incredibly returned for more of same – and was let off in the Irish courts four years later. Which is no reason to love Big Oil. But, still, anarchy runs deep in Ireland.

Big Oil has watched the Irish scene and its public protests and court cases with trepidation. John O’Sullivan, technical director with Providence Resources, told the Financial Times, “We’ve definitely seen a Corrib ripple effect…. [Potential investors] go through the technical assessment, it gets to their main board and then someone who has worked at Shell or read about Corrib says they are not going to touch Ireland.”

Pat Rabbitte, the Irish Minister for Communications, Energy and Natural Resources, acknowledged as much. “You can bring a well ashore in about four years in Norway. By the time we have eventually gone through all the hoops here, it will be 16 or 17 years. I can’t pretend that has been a positive experience for Ireland,” he told Jamie Smyth of the Financial Times.

In 2011, 12 companies were awarded new licenses to explore for oil and gas around Ireland. These included a variety of small to medium players in the field, but despite very favorable terms offered by the Irish government, the mega-powers like Shell didn’t bother to bid.

The O’Reillys swear things are changing and one successful strike could transform the game. Maybe they’re right.

In 2009, Ireland received only 2 bids for offshore test well drilling compared to 350 in the U.K. Since 1975 an average of only one exploratory well has been drilled per year off of Ireland, and only 3% of potentially payable oil or gas fields off the Irish coast are under license for exploration. Estimates are that development of any major field off shore could bring 16.5 million euros to the Irish exchequeter, which would about make the country sound again.

One would think for such a shrunken economy, dipping deeper on the oil exploration dip stick would offer the potential general good. The current Irish government seems to agree. But this is one country that never seems to be able to get its handle on the weird.

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