No oil rush af­ter black gold hunt finds only wa­ter

The Kerryman (Tralee Edition) - - NEWS - BY SI­MON BROUDER

SHARES in Ir­ish oil ex­plo­ration com­pany Prov­i­dence Re­sources took a beat­ing on the stock mar­kets fol­low­ing news that its search for oil off the Kerry coast had come up dry.

Last July Prov­i­dence Re­sources com­menced ex­ploratory drilling at the Drombeg Well in the Por­cu­pine Basin about 220 kilo­me­tres off the coast of Kerry.

Prov­i­dence had hoped the well con­tained some 1.9 bil­lion bar­rels of oil but af­ter two months drilling – at a cost of around €162,000 a day – the crew of the Ste­naIceMAC drilling ship found no oil and just a buried reser­voir full of wa­ter.

The com­pany – which is led by Tony O’Reilly Jnr and based in Dublin – said the well is now be­ing plugged and aban­doned.

In a state­ment to in­vestors is­sued on Mon­day Prov­i­dence said the crew of the Ste­naIceMAX had drilled down 5,281 me­tres to reach the well which is lo­cated in the deep­est wa­ter of an ex­plo­ration ever drilled off the Ir­ish coast.

The ex­plo­ration did find traces of bi­tu­men sug­gest­ing the pres­ence of oil in the well pre­vi­ously but it ap­pears that it had long since leaked from the huge buried cav­ity.

Prov­i­dence CEO Tony O’Reilly Jnr said the re­sults of the Drombeg ex­plo­ration were dis­ap­point­ing.

“The well re­sults at the Drombeg level are dis­ap­point­ing and we will now as­sess th­ese well data in or­der to un­der­stand what im­pli­ca­tions they have for prospec­tiv­ity within the li­cence,” he said.

Mr O’Reilly added that thanks to the firm’s pre-drill deals with en­ergy com­pa­nies Cairn and To­tal – for op­tions on ap­prox­i­mately 70 per cent of any oil found – Prov­i­dence’s fi­nan­cial ex­po­sure to the Drombeg well had been sig­nif­i­cantly re­duced.

News that the ex­plo­ration off Kerry had failed saw shares in Prov­i­dence tum­ble on both the Stock Mar­kets in Lon­don and Dublin where shares plum­meted by around 35 per cent dur­ing early trad­ing on Mon­day.

The shares did re­cover slightly fin­ish­ing down 16 per cent in Dublin and down 29 per cent in Lon­don at the close of trad­ing on Mon­day evening.

Based on the pro­jected daily cost of the twom­onth drilling op­er­a­tion the failed search for oil in the Drombeg Well has cost its back­ers over €10 mil­lion.

News that the well con­tains no oil will also come as a blow to Fenit and Din­gle both of which had been iden­ti­fied as po­ten­tial ser­vice har­bours for Prov­i­dence’s op­er­a­tions if oil had been found in the Por­cu­pine Basin prospects.

Last month Prov­i­dence said that its ex­plo­ration of the Druid prospect, near the Drombeg Well, had also proven un­suc­cess­ful.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.