WoodMac: Ireland's Atlantic Margin frontier Promises success

Ireland's prospects of developing a successful oil industry in the short-to-medium term are negligible, yet the frontier Atlantic Margin holds promise.

This is the view of Wood Mackenzie Consultants Ltd., Edinburgh, which notes that 132 exploration and appraisal wells drilled to date off Ireland have resulted in only two field developments.

"In the near-to-medium term," said Wood Mackenzie, "only three minor developments located in the Celtic Sea can possibly be forecast. Two are marginal oil and gas structures.

"The third, Southwest Kinsale, is expected to be developed as a gas storage facility. This will help provide seasonal swing for the growing Irish gas market, as existing output from Kinsale Head becomes depleted."

Yet the analyst says changes in recent years to Ireland's petroleum legislation has helped fire up interest in the Atlantic Margin frontier area, leading to licensing of substantial acreage off the west coast.

Discoveries

Ireland's hopes to become an oil producer were dashed recently when Statoil (U.K.) Ltd. saw disappointing results from an appraisal well in Connemara find.

Initial reserves estimates for Block 26/28 Connemara find stood at 40 million bbl of oil, said Wood Mackenzie, with a potential upside to double that figure.

A planned 60-day extended test on the 26/28-A2 appraisal well was cut short when flow rates were low and pressure in the well dropped faster than expected.

This, said the analyst, resulted in Connemara being declared uncommercial: "This has not only delayed first production of Irish oil but also affected the possible commerciality of any new discoveries in the area that might have been able to use the infrastructure."

Block 49/9 Helvick discovery is currently estimated to have reserves of 6 million bbl of oil. Development is being considered in conjunction with nearby 60 bcf Ardmore gas structure, said Wood Mackenzie.

The area around Block 48/24 Seven Heads discovery is being offered once again for licensing. Seven Heads was discovered by Esso Ireland Ltd. in 1974 and subsequently relinquished (OGJ, Oct. 13, 1997, p. 37).

"The reservoir covers a large area but is thin and until recently has been regarded as uncommercial," said Wood Mackenzie. "Reserves could be in the order of 5 million bbl of oil and 100 bcf of gas."

The analyst expects Seven Heads to be developed as a satellite of existing Kinsale Head field: "Marathon, as operator of Kinsale Head, may be able to generate greater value from development of Seven Heads than any other player."

Southwest Kinsale lies beneath Kinsale Head gas field. It was initially earmarked for development through Kinsale Head facilities but is now expected to be developed as a gas storage facility.

The reservoir is thought to hold reserves of 30 bcf of gas, 10 bcf of which is thought to be "cushion gas" and the other 20 bcf available for seasonal depletion. The reservoir is thought capable of delivering 50-200 MMcfd.

Exploration plans

Wood Mackenzie said basins off West Ireland have been reinterpreted in the light of exploration successes along the Atlantic Margin in the U.K.'s West of Shetland area and in the Norwegian Sea.

"The recent revival in exploration activity has so far proved successful," said the analyst. "Enterprise discovered Corrib North gas structure in 1996, and Mara- thon is thought to have recently made a gas discovery in the Porcupine basin with well 35/30-1."

London's Enterprise Oil plc is expected to drill two Atlantic Margin wells next year: one to appraise Corrib North and one in another Porcupine basin block.

Corrib North reserves have been tentatively pegged at 1.5 tcf of gas. Marathon Petroleum Ireland Ltd. and Statoil are both planning exploration wells west of Ireland in 1998.

Wood Mackenzie said, "Future levels of exploration are likely to be maintained at 3-4 wells/year in the Atlantic Margin basins alone."

"The Atlantic Margin of Ireland is currently regarded as being a prospective area for both gas and oil discoveries," said Wood Mackenzie. "Initial results point to it being predominantly a gas-rich province.

"There are currently no oil discoveries on the Atlantic Margin of Ireland that contain sufficient reserves to be developed in the foreseeable future, but new oil discoveries are a distinct possibility."