Potential €200 million investment by Exxon

Oil giant Exxon is preparing to begin drilling off the Irish coast within weeks, an exercise that could cost it and its partners €200 million it was reported in this mornings Irish Times.

Exxon has a 27.5 per cent interest in the Dunquin prospect in the southern part of the Porcupine Basin, more than 130km from the southwest coast, and has plans to begin exploratory drilling there shortly.

According to estimates, the area could hold four billion barrels of oil and a similarly large quantity of gas. However, that has not been proven and Exxon’s drilling is geared at establishing what hydrocarbons the area might hold.

Industry sources speculated yesterday that it could begin drilling as early as April as the rig that it has hired for the purpose – the Eirik Raude – has become available ahead of schedule.

In addition, the multinational has hired four craft, known as platform supply vessels, to service the rig from French group Bourbon.

According to some reports, the contract with Bourbon begins on March 15th and will run for 120 days, with an option of extending it by a further two months.

Those dates would not necessarily coincide with the beginning and end of Exxon’s proposed drilling operations.

The multinational itself said yesterday that it remained committed to begin drilling in the Porcupine Basin in the first half of 2013.

Exxon’s licence area is in block 44, whose nearest point is about 130km off the southwest coast.

The distant location, deep water and hostile conditions make drilling there expensive. The cost could come to around €2 million a day. On the basis that the work will run for three to four months, this implies a cost of €200 million.

Its partners include two other high-profile players, Italian group Eni, which also has a 27.5 per cent interest, and Spanish multinational Repsol, which has a 25 per cent. Irish group Providence (16 per cent) and Sosina (4 per cent) hold the remaining interests.

It is likely to be later this year before the group can give any indication of what hydrocarbons its licence area could contain.

Source: The Irish Times