MARATHON TO BOOST E&D SPENDING OFF IRELAND

Marathon Petroleum Ireland Ltd. has outlined a significant program of upstream capital spending related to offshore exploration and gas production in Ireland. The company plans to drill seven exploratory wells and shoot at least 4,000 line km of seismic during the 5 year period that ends Dec. 31, 1996. In addition, it will install compression in Kinsale producing gas field to produce another 120 bcf of natural gas. The program's announcement follows lengthy negotiations between Marathon and

Dec. 16, 1991

2 min read

Marathon Petroleum Ireland Ltd. has outlined a significant program of upstream capital spending related to offshore exploration and gas production in Ireland.

The company plans to drill seven exploratory wells and shoot at least 4,000 line km of seismic during the 5 year period that ends Dec. 31, 1996.

In addition, it will install compression in Kinsale producing gas field to produce another 120 bcf of natural gas.

The program's announcement follows lengthy negotiations between Marathon and state owned Bord Gais Eireann (BGE) over pricing of gas found under the new exploration program.

Additional exploration and the introduction of a new formula for pricing Irish gas is another plank in the Dublin government's plan to revitalize flagging offshore activity. In 1992 it also will introduce new licensing and taxation terms.

MARATHON'S ROLE

Marathon is Ireland's sole hydrocarbon producer.

Kinsale field produces about 210 MMcfd with another 50 MMcfd from the Ballycotton satellite field.

BGE purchases all the gas for domestic use, but supplier and purchaser have been at loggerheads for years over Marathon's claim for higher prices.

Under the new agreement, additional gas found under the exploration program will be offered to BGE at market prices, thus improving commerciality prospects of future discoveries. And if the state gas company can't absorb all supplies offered from new offshore developments, it will help Marathon sell the gas either to domestic customers or abroad.

The incremental 120 bcf of gas from the compression project will also be sold at market indexed prices.

BENEFITS TO IRELAND

The Irish government said additional supplies from Kinsale would be a significant addition to the volumes available to BGE ahead of a possible link with the U.K. gas grid through a pipeline across the Irish Sea.

Irish Energy Minister Robert Molloy said the agreement with Marathon was extremely valuable because it provided a welcome continuation of exploration in Irish waters. Molloy is committed to introducing new license terms in 1992 in conjunction with a more favorable tax regime. The legislation to enact these changes is scheduled for early 1992.

"The aim will be to create an overall environment in Ireland responsive to the needs of international exploration companies and ... fully competitive with other European countries," he said.