Providence to back out of deep Atlantic to focus on Barryroe
Fearghal O’Connor
PROVIDENCE Resources is to abandon its ambitions to seek out new oil and gas finds in the deep Atlantic off Ireland’s west coast in order to fully focus on its shallower Barryroe find.
The company’s new chief executive, oil industry veteran Alan Linn, told the Sunday Independent that the new strategy made more business sense than the expensive search for hydrocarbons in deep waters and was also more environmentally sustainable than the one pursued by the previous management team.
There has been growing political hostility towards the exploration sector in Ireland leading other oil and gas companies to abandon the search for oil and gas here.
But Linn, who recently replaced Tony O’Reilly as CEO of Providence, said he would not be overly concerned if the Green Party was to be part of a new government here.
Barryroe is not affected by an exploration ban announced by the previous government for Irish waters because this would only pertain to new licenses. But Green Party leader Eamon Ryan previously told the Sunday Independent that an outright ban on exploration would be top of his agenda in government negotiations.
Linn said he would welcome a meeting with Ryan to discuss Providence’s belief that it can develop Barryroe in a sustainable way.
He said, speaking on a personal level rather than as CEO of Providence, that he did not see coalition government as the ideal way to take the tough decisions that would be needed to combat climate change.
“There’s a lot of extreme rhetoric, but there’s very little getting done. I would much rather work with people to map out a really sensible path and actually start doing it,” said Linn.
The exploration company is now particularly eager to see how much of the potential 310 million-barrel find at its Barryroe prospect is made up of gas rather than oil, said Linn.
“Gas is a recognised transition fuel as we move towards renewables. And with gas, if you do conversions to power stations in Cork and if you look at steam reforming of methane to produce hydrogen, then you would be using domestic gas produced potentially from Barryroe in order to generate power and provide heat. It would be carbon neutral, because you’d capture that gas, take it offshore and potentially sequester it in the now depleted Kinsale Head, which is ideal for carbon capture,” he said.
The “sweet, waxy, high quality” oil found at Barryroe would be better used to manufacture items such as tyres and phones rather than using it to burn for energy and this would reduce its carbon footprint, said Linn.
Providence now needed to be completely focused on proving the commerciality of the “significant volumes” of oil and gas deposits it believes are at Barryroe, he said. In the coming weeks the company will seek new funding from shareholders in order to keep the company going long enough to find a partner that can advance its efforts to prove up the project. An €8m deal with Chinese group APEC Energy that failed to complete had left the company in a crisis situation last year, ultimately ending in the departure of long-time CEO O’Reilly and a restructuring of its board.
“What we need to do is reduce our exposure to the deep water. Whilst it’s sexy, it is a massive drain on your resources. Even if you have an exploration discovery, you know, it can take you 10 to 15 years before you can bring that to fruition and start generating cash flow,” he said.
Linn was not prepared to comment as to whether the previous management of the company had made a mistake to pursue oil and gas at deep water Atlantic targets for so long except to say that the business model of proving up a find in order to attract a large partner was one that had been standard in the industry.
“That’s not the case in today’s climate because the oil price is fluctuating,” he said.