Jim Mitchell
Question:5 Mr. J. Mitchell asked the Minister for Energy the present position regarding oil finds within the jurisdiction of the State; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Oil and Gas Exploration.
Michael Moynihan
Question:15 Mr. Moynihan asked the Minister for Energy if he will outline the details of the oil exploration programme agreed with the oil companies in 1991.
Tomás MacGiolla
Question:30 Tomás Mac Giolla asked the Minister for Energy if he will outline the information available to him regarding the results of oil and gas exploration undertaken in Irish waters during the summer months; if, in view of the doubt regarding oil supplies from the Middle East, he has any plans to promote further explorations; and if he will make a statement on the matter.
Monica Barnes
Question:43 Mrs. Barnes asked the Minister for Energy whether the prospects of getting Irish oil ashore have changed in the light of the current higher level of oil prices and the number of wells that will have been drilled in Irish waters during 1990; and the forecast for 1991.
I propose to take Questions Nos. 5, 15, 30 and 43 together.
Four wells were drilled in the Irish offshore during 1990. Two wells were drilled by Marathon and one each by Conoco Celtic Ltd. and Hydrocarbons Ireland Ltd. My Department receive, on a confidential basis, all information which arises from the drilling of wells. I do not propose to comment on the results of drilling due to the confidential nature of the well data. In 1991 I expect at least three exploration wells to be drilled. The first well will be drilled by Marathon on the "Kilmore" prospect in Block 50/3 in the Celtic Sea and will be spudded within the next few days. In addition both Aran Energy and Bula have drilling obligations this year in the Celtic Sea. The precise location and depth of all wells is, of course, subject to approval by my Department.
Although oil prices have stabilised somewhat in recent weeks at a level slightly below $20 per barrel, it is perhaps too early to predict the long term effect of recent events in the Middle East on hydrocarbons exploration activity. While this country cannot influence this crucial factor of price, I am nonetheless anxious that we should take all reasonable measures within our own competence to promote further exploration effort within our own territory.
On 19 April 1991 I announced that a licensing round will be held in mid-1993 which will cover offshore blocks in the Erris and Slyne troughs off the west coast. The purpose of announcing the round at this stage is to allow the industry time to acquire seismic data of the region so as to be well placed to make decisions on applications for licences under the round. The open door policy regarding licensing will continue for areas not included in the 1993 round.
I have also asked my Department to review our offshore licensing terms. These were last reviewed in 1987 and I am anxious that our terms be brought up to date and that measures to further encourage exploration efforts are identified and implemented. I might also mention in this context the Government's recent decision to incorporate petroleum taxation legislation in the Finance Bill, 1992. This will remedy a long-standing deficiency in Ireland's overall regime and, as a measure which dispels an element of industry uncertainty, should impact positively on the perception of Ireland as a location for exploration and production.
As part of the on-going promotion of the Irish offshore my Department make well and seismic data available to the industry at minimal cost as soon as they become available for release. Technical reports on acreage considered worthy of specific promotion are also prepared and sold to the industry.
While oil accumulations have been discovered in the Irish offshore none of these has so far been deemed commercial by the companies concerned. Deputies will, however, be aware that Atlantic Resources and its partners are currently undertaking an assessment of the feasibility of producing oil from the Helvick Field, located in Block 49/9 in the Celtic Sea off the coast of Waterford. The decision on whether to proceed or not with this project is in the first instance one for the relevant companies themselves to make.
The Minister said that the companies concerned have not deemed any of these projects to be commercially viable. Does this mean that because the world is awash with oil they do not see any commercial necessity to explore in this case or, alternatively, that the oil is not there? Does the Minister agree that the recent Gulf crisis has accentuated the need for an independent supply, preferably a domestic one? Is it a question of no tax incentives being available or no supply being available?
Licences are issued to the companies and if they wish to come forward to the Department with a development plan for the blocks for which they have licences they may do so. They are under no obligation to do this. The Department are fully informed of the results of all drilling tests carried out. With regard to my statement about the companies not deeming any of their finds to have been commercially viable, this was decided on the basis of whatever criteria the company apply. The Deputy should bear in mind that the Department also have full information in regard to finds in any of these blocks.
I have a difficulty with the term "commercial find" as calculated by the companies concerned. This could mean anything. Given that he has the information. I want to ask the Minister if the oil is there? Is it because there is a lot of oil elsewhere and they have other interests that the companies do not want to declare this commercial find? Will the Minister tell the House when the first drilling licence was issued? Would he consider setting up a State exploration company if these commercial enterprises are not interested in bringing ashore whatever oil finds are there?
It is very wrong of the Deputy to seek to convey the impression that there is an enormous quantity of oil off our shore which has been found by companies who for one reason or another have decided not to bring it ashore. That is a very unrealistic scenario. I want to dispel any such impression the Deputy might be seeking to create, because some people believe that when oil companies make a find they keep it to themselves, do not tell anyone for their own reasons and develop it when it suits them. I want to assure the Deputy that the Department have full knowledge of all the drilling tests carried out. If world oil prices were to stabilise at a somewhat higher level than that which has obtained in recent years this might prompt a re-examination of the oil finds which have been made already but which were deemed to be uncommercial at the time. If prices were to stabilise at a higher level it might be worth exploring those blocks further. This has not happened and, despite peaks at the start of the troubles in the Middle East, prices have settled down to the $20 mark. Indeed, prices have been much lower than that in recent years. Therefore, the incentive from a commercially viable point of view was not there to develop these finds.
Having said that, it is important to recognise that there are companies who are prepared to continue looking, investing and carrying out tests on their blocks. I think it is against this background that Atlantic Resources are examining the feasibility of developing the Helvick oil field in the Celtic Sea and that Aran are conducting a similar exercise in the Connemara field in the Porcupine Basin off the west coast. To sum it up in a few words, if oil prices rise dramatically and remain high then there could be a massive renewed interest in our offshore.
What about the question of State——
Order, please.
However, until that happens, we have to be realistic and recognise that approximately 110 wells have been drilled here with only two commercial finds so far at Kinsale and Ballycotton.
I call Deputy Tomás Mac Giolla——
What about my question——
Order. I call Deputy Tomás Mac Giolla, whose Question No. 30 refers.
For years we have all been very anxious to see an oil strike. I think every Government have looked for an oil strike to pull them out of the doldrums. There have been some oil discoveries. As the Minister is aware, an agreement was reached between Atlantic Resources and a Dutch-Australian consortium in regard to the oil find in block 49/9. Is the Minister aware of the extent of that agreement and has any initiative been given to the Dutch-Australian consortium in regard to whether and when oil will be brought ashore?
As the Deputy rightly said, an announcement was made by Atlantic Resources that they had reached agreement with an Australian-Dutch consortium whereby they would farm out some of their interest in licence No. 2/81 which covers block 49/9. As part of this arrangement it is proposed that an early assessment will be carried out on the feasibility of proceeding with a commercial development scheme for the block 49/9/2 accumulation, known as the Helvick oil field. It will be up to the companies to decide on this issue. The farm out agreement has, as required, been submitted to me for approval. I want to say at this stage that I welcome the development in so far as it could result in Irish oil being brought ashore in commercial quantities, albeit fairly small quantities.
Does the initiative now lie with the Australian-Dutch consortium? Has it been taken out of the hands of Atlantic Resources?
They are now part of the consortium and the initiative lies with the licence holders.
I want to return to a question the Minister did not answer. Would the Minister consider licensing a State exploration company who would compete with the private sector in this area as some of the exploration companies have irons in other fires and they may not be anxious in certain circumstances to bring any commercial oil finds ashore?
I am surprised at the Deputy. This is a new departure.
Deputy Mac Giolla should not be surprised at my suggestion, as he knows that I am one of the real working Members of this House.
I am behind the proposal 100 per cent.
We are not bound by any ideology.
I do not see any commercial necessity for this at present. This might be an opportune time to express the appreciation of this House and the State generally to the many exploration companies who have invested vast sums of money in exploring in the Irish offshore.
Great philanthrophy.
Deputy Mitchell is now suggesting that we should now commit hundreds of millions of pounds of Exchequer funds to exploration in the Irish offshore, which is a high risk business. We should leave this issue to the experts and the private sector who have served us well in the extent of the exploration they have carried out.
I take it that we will not be joining OPEC——
I hope they will continue to make that investment because they have a much wider spread on their costs than the Irish State would have if it got involved in this exploration. I certainly will not make such a recommendation.
I want to bring in Deputy Mary Flaherty for a final question.
Deputy Mitchell would be the first person to haul the Minister before the Committee of Public Accounts if such a venture did not work out. Obviously the viability of whatever oil resources we have depend on international prices — as the Minister referred to in his reply. Can the Minister take this opportunity to clarify whether it is the shortage of refining capacity worldwide that is responsible for maintaining the price and is the lost refining capacity related to the Gulf situation and the Middle East?
An old gentleman in the oil business advised me, in the early months, never to try to predict the price of oil or the reasons for the price increasing or decreasing. It is far too complex and a myriad of factors, many of which are irrational, have a serious influence on why oil prices increase and decrease. They are based on much wild guessing by people at times. The question of refining capacity is interesting from our point of view.
There was an excess in refining capacity worldwide but that situation has changed in recent years and I hope it will be to our advantage because of the existence here of the national oil refinery at Whitegate into which the State is anxious to attract investment for the purpose of modernising and expanding its facilities to enable it to meet modern standards for petroleum products and to remove the mandatory regime and the diseconomy that exists because of prices here. Now that the refining capacity is moving more to our advantage, I hope that will help investment in Whitegate.