Ireland’s oil potential may “hold some intrigue” but exploration carries “real risk”, according to a BP executive.
While many believe waters off Ireland could prove lucrative, Bernard Looney, chief operating officer in production at the energy giant, said the sheer size, depth and hostility of some of the areas makes it “exceptionally challenging”.
During a discussion about whether Ireland’s oil and gas potential is over-hyped or under-sold, Mr Looney said it is “a question of whether the rewards justify the risks”.
In preparation for the event at the Irish Embassy in London, he said he had a discussion with one of BP’s exploration directors about the “three principal basins” – the North Celtic Sea, the Porcupine basin and the Rockall Trough.
“And just taking one of them – the Rockall Trough – it is one of the largest, unexplored basins in the planet. It is larger than the island of Ireland alone. These are no small facts.
“But it’s not easy. It’s remote,” he said.
Mr Looney, addressing around 100 people at the debate organised by the London Irish Business Society, said: “The Rockall Trough is up to 400km offshore. It’s in water that’s up to 1500m and it’s hostile.
“In February 2000 a research vessel encountered the largest wave ever recorded by scientific instruments in the open ocean, with an individual wave that measured 95 feet or 29 meters. And to top it all, if you’ll excuse the pun, it is overlaid with basalt… which makes it exceptionally challenging.
“But that’s what we do. That’s what companies like BP do. This is the sort of area where we find we can be distinctive.”
He added: “It’s simply a question of whether the rewards justify the risks, and the reality is that given the track record in Ireland, Irish exploration does carry real risk.
“In the end we can debate Ireland’s potential until the cows come home but ultimately it can only be determined by putting holes in the ground. Whether BP drills those holes or not remains to be seen.”
But Tony O’Reilly, CEO at Providence Resources, an Irish-based upstream oil and gas company active in the exploration and development of hydrocarbon assets, said Ireland’s oil potential is simply “under-explored”.
He said: “Is it over-hyped – and some people accuse me of being a little bit of a hype merchant – or is it undersold? I would just simply say it’s under-explored. That’s the key message. There have not been enough wells drilled.”
He added: “Look at Aberdeen and you realise what a phenomenally successful area it is now, and 45 years ago it was a fishing village. Why can’t we have that in Ireland?”
BP left Ireland in 1989 after spending 120 million dollars (£71m) on about 17 explorations, leaving “a whole lot wiser but with rather less money”, Mr Looney said.
He added: “The reality is that there is much more competition today for the investment dollar.
Inevitably when we face choices of where we spend our exploration budget, we’re drawn to conversations about above the ground factors and below the ground factors.”
Mr Looney said that “consistency, stability and predictability” are the things BP look for when making investments.
“And on the latter, the below the ground, what’s down there, there’s no doubt that Ireland does hold some intrigue,” he added.
Referring to The BP Energy Outlook, Mr Looney said the world is set to demand “more and more energy” in the future.
“We forecast the demand for energy will grow by 1.5% per year between now and 2035, and when you do the math, that in aggregate, amounts to about 40%, or the equivalent of adding another China and another United States combined to the world by 2035,” he said.
“The bottom line is that the world will continue to demand more and more energy into the future.”
Mr Looney said that “by 2035 a full four fifths, or 81% to be precise, of the world’s energy will be supplied by oil, gas and coal”.
He added: “And that’s down only 5% from today’s numbers. And for the first time since the Industrial Revolution no single fuel will be dominant. In fact, oil, gas and coal will each converge on having 27% share at that point in time.”
Mr Looney said the issue is not about the quantity of resource that is out there.
“It’s about accessibility, and quite frankly, affordability. Future reserves are sitting in deeper, hotter, higher pressure and more hostile surroundings,” he said.
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