Dáil Éireann - Volume 377 - 28 January, 1988

Ceisteann—Questions. Oral Answers. - Offshore Exploration.

9. Mr. P. O'Malley asked the Minister for Energy the number of applications for oil and gas exploration licences he has received since the announcement of 30 September 1987 of new terms for offshore exploration; and if he will make a statement on the matter.

25. Mr. Spring asked the Minister for Energy the number of companies to date who have made commitments to explore for oil or gas in the Irish offshore as a result of the new licensing terms announced by him;— and if he will make a statement on the matter.

26. Mr. Desmond asked the Minister for Energy if he will outline the full extent of the drilling to be undertaken in the Irish offshore in 1988; and if he will make a statement on the matter.

Mr. R. Burke: I propose to take Questions Nos. 9, 25, and 26 together. The Deputies are aware that when I announced new licensing terms for the Irish offshore in September 1987 with the purpose of increasing the level of exploration and thereby ensuring that whatever commercial deposits of oil or gas exist in our offshore would be found as quickly as possible, I informed the House that there could be no guarantee that the new terms would immediately produce a dramatic increase in drilling activity. Nonetheless, I am now pleased to be in a position to inform the Deputies that the new terms have in fact achieved positive results already. As a direct result of these new terms, licensing agreements have [539] been concluded with two oil companies both of which involve drilling commitments. The first well under these licences will, in fact, be drilled in the Porcupine in 1988. I am also happy to say that negotiations are at an advanced stage with a consortium of three other companies to license other blocks in the Porcupine basin. This, agreement, which I expect will be concluded shortly, also involves drilling commitments and it is possible that a first well under the licence will be drilled in 1988.

With regard to the overall 1988 drilling programme, it is not possible to be definite at this stage as to the final number of wells which will be drilled this year. As of now, however, I expect at least four wells to be drilled while the drilling of other wells are a possibility. These depend, inter alia, on the results of predrilling evaluation by companies of the prospects involved and, in some cases, on negotiations currently in progress with the Department.

Mr. P. O'Malley: Given that it is four months now since these new favourable terms were announced, is the Minister satisfied generally with the level of response and in particular with the level of commitment.? From the Minister's reply I am not clear whether there is a firm commitment for any well. Perhaps he would clarify that. I would like him to comment also on the contacts that have been made with his Department since these terms were introduced and as to the likely prospects of the number of wells to which a commitment would be made in the course of this year. Perhaps the Minister would give more factual information on this.

Mr. R. Burke: I am reluctant to get into estimates because the Deputy would come back in a couple of months time and ask what happened to the estimates. I have met representatives of more than 20 companies from around the world — some were operating here before, some were here and left and others were never in Irish waters. No Minister would be happy with the level of take-up. I would [540] like to see 20 or 30 wells this year but, being realistic, I am happy that the aim of the new terms is being met and that there is increased interest. For example, there has been a take-up in the sale of copies of the Porcupine report published last year — each report costs about £8,000. There has been tremendous interest in these waters. As well as my own contacts with these oil companies, there have been a considerable number of contacts between officials of my Department and representatives of other companies.

Mr. Spring: Like Deputy O'Malley I feel the Minister's response was not very explicit. I took him to say there were two companies with definite commitments in the Porcupine in 1988. Are they new companies to Irish exploration or were they here already? Will the Minister clarify if there are any existing commitments or new commitments arising from his September 1987 announcement in relation to the Celtic Sea? I can appreciate the Minister not wanting to be tied to specific numbers because obviously one has to wait until commitments are made and even then circumstances can change in 12 months, but will he give us some indication of what he considers is the situation in the Porcupine? Obviously the publication of the report last year enhanced the prospects of the Porcupine by providing all available information. Will he tell us what information the report showed which was not previously available? What are the prospects for the Porcupine Basin? Does he now expect the concentration of exploration to be in the Porcupine Basin as opposed to the Celtic Sea?

Mr. R. Burke: I believe the interest will be in both areas. What the Porcupine report did was to bring together all the technical information available. There was a large bank of knowledge available to the Department and it was thought desirable to bring it together in one report. This report is not giving new information but is making information [541] available to companies which they otherwise would not have.

As far as companies are concerned, BP have a commitment in the South Porcupine. There is a consortium of three companies involved in a well in the northern area and it will be up to them to make an announcement. I hope the well will be drilled in 1988 and that we will soon finish negotiations. There has been another commitment as a result of the terms I announced for the Celtic Sea and there are other negotiations going on for new commitments in the Celtic Sea. These are all in addition to interests which were already in existence.

Mr. R. Bruton: Is the Minister satisfied that there is a sufficient level of interest in exploration specifically geared towards gas resources? Has he considered gas prices as an obstacle to interest in gas exploration?

Mr. R. Burke: Of course I want to find either oil or gas but, as far as gas is concerned, price is not the problem. Offtake is the problem. It is also a question of the capacity of the Irish market. That was one of the reasons the Government confirmed the decision of the previous Administration to extend the pipeline to Dundalk. The Deputy will be aware that we recently got sanction for £12 million EC aid for that pipeline and that is going ahead this year. The bigger the market available the greater the possibility of there being more gas exploration. I have also had discussions with the British Energy Secretary about the possibility of selling some of our gas to the United Kingdom. That is under discussion at the moment by the two Governments.

Mr. P. O'Malley: Does the Minister consider the low cost of oil is one of the factors why there has not yet been a greater commitment to a drilling programme, or does he think the oil companies take a long term view; in other words, the fact that oil prices are low would not inhibit them from carrying out a drilling programme?

[542] Mr. R. Burke: In case there is any misunderstanding about this, I am very happy with the level of interest and the response from the companies to the terms. Obviously I would be happier if the companies committed themselves to 20 or 30 wells but that is not the way business is conducted. The terms were announced four months ago and I am very happy with the response to date. Obviously the price of oil has an influence on the drilling programme because the companies have to take into account the funds available to them and they have to decide how much of those funds will be put into their drilling programmes, and where. As our results last year were not as good as we had hoped, they have had an effect on our drilling programme. However, I believe the companies are in for the long haul and we have very special attractions for them. We are a stable democracy in the European Community and that alone is a considerable attraction because they can explore in our waters in the hope of making a find which they can bring onstream immediately or in the future.

Mr. Spring: Given the renewed interest in the Porcupine Basin, an interest which had not been there since 1978, how does the Minister perceive the level of technological development in relation to extracting oil from the Porcupine Basin which is 1,400 ft. or 1,500 ft deep. To my knowledge there did not seem to be development in this area in the last number of years and there was a reluctance to actually explore there, unless it was in the long term. Have there been any new discoveries by the oil companies as to the possibility of extracting oil from this deep and dangerous sea?

Mr. R. Burke: This has been a problem in the past but, as the Deputy is aware, the companies are continually developing technology and, because oil and gas are becoming scarcer commodities the companies have to go into areas which ten years ago would have been unthinkable. [543] The companies have developed the technology to go as deep as 3,000 ft., as in the case of the BP well. They are going down about 1,000 metres and even a further 1,500 or 2,000 metres into the earth's crust. This is very advanced technology and BP are leaders in the field, we are very fortunate to have them exploring in Irish waters.

Mr. Spring: In the event of BP making a commercial find, is the technology such that they could begin extracting oil from the depth the Minister mentioned?

Mr. R. Burke: We are talking about the well being drilled in 1988. I can assure the Deputy he will be the first to hear about it, as well as the rest of Ireland; if there is a commercial find it will not be kept secret. We will then have a number of stepping wells and we will decide on the full commercial find. The are convinced that the technology will be available to them because they continue to develop as they drill.