Commercially Viable Oil found off Cork

Sleepy

Some good news for a change:

independent.ie wrote:

EXPLORATION company Providence Resources has struck oil and discovered the first commercial well off the Irish coast.

Providence Resources said flows in Barryroe, 50km from Co Cork, is almost double the 1,800 barrels of oil per day (bopd) barrier set by the firm as being commercial.

Tests are also being carried out on gas flow rates in the area.

Tony O'Reilly, chief executive of Providence, said flow rates of 3,514 bopd have been discovered at 100-metre depth in the North Celtic Sea Basin.

"The well has also confirmed that the basal sands are laterally continuous, highly productive and that the oils are of a very high quality," he said.

The test area covered 300 sq km - equivalent to a medium to large North Sea oil field - and was bigger than expected with much better flow rates than first hoped for. Providence Resources made the announcement on the Dublin and London stock exchanges.

Mr O’Reilly told Morning Ireland on Radio One that while there was more work to be done, it was hoped the find would put Ireland on the map and attract more gas and oil exploration to the country.

Shares in Providence Resources soared last month after the company it had found light crude oil in a large sandstone reservoir about 7,550ft under the sea off the south coast. Providence found the crude oil while drilling an appraisal well -- its fifth in the area.

Providence, which owns 80pc of the Barryroe oil field, then conducted a flow test to ensure that the find was commercial.

Analysts said the well must produce about 1,800 barrels of oil or gas equivalent every day to make commercial sense. Any oil could eventually be transported by pipe to the Whitegate refinery in Cork.

Providence is engaged in the biggest drilling programme in Irish history as it looks for oil and gas off the Irish coast. Barryroe was one of the first areas to be drilled because it has proven reserves.

Technical director John O'Sullivan said Providence could now look forward to materially progressing the project.

"These sands, which appear to have an intact overlying pressure seal, sit directly on proven, mature and oil-prone source rock and therefore open the route to significant resource volumes within the Barryroe licence area," he said.

Providence holds an 80pc interest in the licence and operates it on behalf of its partners, San Leon Energy and Lansdowne Oil and Gas.

- Sarah Stack and independent.ie reporters

http://www.independent.ie/business/irish/oil-strike-off-cork-coast-raises-3514-barrels-a-day-3051267.html

Wonder how long it is before the Shell to Sea muppets try to get in the way of this potentially hugely beneficial initiative? At that flow-rate, this field could be worth well over 100 million per year to the Irish economy (based on 3,514 for 365 days a year @ $100 a barrel it'd be $128,261,000 worth of oil per annum).

Is mise le key

Yes, the video on the independent website says the exploration company estimates as much as 1 billion barrels of oil.

How much is a barrel of oil right now?

Sleepy

At today's prices:

WTI Crude Oil
$105.67 ▲0.24 0.23%
5:12 AM EDT - 2012.03.15


Brent Crude Oil
$124.97 ▼0.02 0.02%
5:06 AM EDT - 2012.03.15

Source: http://www.oil-price.net/

Is mise le key

Sleepy wrote: »

At today's prices:

WTI Crude Oil
$105.67 ▲0.24 0.23%
5:12 AM EDT - 2012.03.15


Brent Crude Oil
$124.97 ▼0.02 0.02%
5:06 AM EDT - 2012.03.15

Source: http://www.oil-price.net/

The oil is reported to be of high grade, so even priced at the low end at $100 a barrel it currently stands at a value of $100 billion.

Great news for providence.

Tefral

Hopefully the Irish government tax the flaming crap out of it now like the Norweigans do to their companies so it might actually benefit our economy rather than giving it away like the gas!

Sleepy

Even assuming they use as many legal tax avoidance measures as possible that should still equate to about €5bn in tax revenues over the lifetime of the field.

Bullseye1

No doubt the government will give it away for free.

listermint

I think this is a better source than the Indo

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11147173

Sleepy

cronin_j wrote: »

Hopefully the Irish government tax the flaming crap out of it now like the Norweigans do to their companies so it might actually benefit our economy rather than giving it away like the gas!

So, you think it'd be a good idea to tax it to the point that it becomes unviable to extract? Or at a level high enough to discourage other firms from investing in exploration off the Irish coast?

Yes, the government needs to take a cut of any profits but being greedy doesn't strike me as the best strategy tbh.

Tefral

Sleepy wrote: »

So, you think it'd be a good idea to tax it to the point that it becomes unviable to extract? Or at a level high enough to discourage other firms from investing in exploration off the Irish coast?

Yes, the government needs to take a cut of any profits but being greedy doesn't strike me as the best strategy tbh.

No but a balance needs to be "struck" excuse the pun..

I understand that we arent like Norway where it seems anytime they try put a hole in the ground oil or gas comes out of it, but i do think we are lenient with our resources would you not agree?

happyman81

Yay. The annual Providence Resources oil find spectacular. Don't be surprised if this turns to be nothing. It has done the last nine hundred times.

I used to own shares, and when I went to the bank to sell them, the manager went 'Ahh, Providence Resources strike again'. He then went on to tell me that PR 'strike oil' every year or so in an effort to momentarily boost the share price, but the oil never materialises.

So don't get your hopes up.

Spacedog

Black Gold!!!, This solves all our economic problems!!!!!!, just like Corrib Gas without the corrupt Ray Burke to have given it away.

YEAH!

GO IRELAND!!!!!!!!!!!!!!!!

Scofflaw

Is mise le key wrote: »

The oil is reported to be of high grade, so even priced at the low end at $100 a barrel it currently stands at a value of $100 billion.

Great news for providence.

I'm going to rather cautiously amend that to "great news by Providence", given that both Providence and the Indo are owned by Tony O'Reilly, and that Providence have a track record of blowing their own trumpet in order to boost share prices. A billion-barrel field would be enormous, but it doesn't sound as if they have enough testing done to make that estimate seriously meaningful.

cordially,
Scofflaw

mconigol

Remember, if it materialises, this is a hugely significant discovery for Ireland. The first commercial oil find proves that there are resources out there. This should encourage further exploration and development. Assuming the government don't put too many obstacles in the way.

touts

Oil discovered off the coast of Irland!
Champagne corks popping in Reichstag this morning!

GSF

Bullseye1 wrote: »

No doubt the government will give it away for free.

well everyone in Ireland assumes it can be extracted at zero cost too, so maybe they are just reflecting the bonanza mentality of the general populace.

big b

Is mise le key wrote: »

Yes, the video on the independent website says the exploration company estimates as much as 1 billion barrels of oil.

How much is a barrel of oil right now?

Scofflaw wrote: »

I'm going to rather cautiously amend that to "great news by Providence", given that both Providence and the Indo are owned by Tony O'Reilly, and that Providence have a track record of blowing their own trumpet in order to boost share prices. A billion-barrel field would be enormous, but it doesn't sound as if they have enough testing done to make that estimate seriously meaningful.

cordially,
Scofflaw

Yep, before we go nuts.....

1,000,000,000 barrels of oil at a production rate of 3514 bpd means the field has a life of 780 years.

I suspect it's a typo & should read $1billion of revenue, which at $130/barrel would mean 7.5 milion barrels approx, or about 6 years production.

That would be more in line with the amount of hype surrounding the find.

Hopefully more like this will follow though...

Lockstep

I await the posts from those who claim that we can now tell the Troika to f*** off as we've discovered a crock of gold.

Is mise le key

Lockstep wrote: »

I await the posts from those who claim that we can now tell the Troika to f*** off as we've discovered a crock of gold.

The irony is we were all waiting to see the first post like yours above.;)

Tora Bora

I spotted Tony O Reilly, coming out of Aldi yesterday, pushing two trollies filled to the top with barrels;)
There must be something in that oil discovery story:D

smcgiff

Glad to see the People's Republic of Cork will be able to fund its indepenence drive.

Don't worry we'll offer the rump republic generous bail out interest rates

listermint

Scofflaw wrote: »

I'm going to rather cautiously amend that to "great news by Providence", given that both Providence and the Indo are owned by Tony O'Reilly, and that Providence have a track record of blowing their own trumpet in order to boost share prices. A billion-barrel field would be enormous, but it doesn't sound as if they have enough testing done to make that estimate seriously meaningful.

cordially,
Scofflaw

Lockstep wrote: »

I await the posts from those who claim that we can now tell the Troika to f*** off as we've discovered a crock of gold.

Which is a reason i put in another source

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11147173

mike65

Here is the original thread I put up when drilling began,

http://www.boards.ie/vbulletin/showthread.php?t=2056248590

dusterd

I'm not too well informed on the issues concerning the oil and gas that's being found in our waters, so dont slate me if I get it wrong.

1. Do these finds not belong to the Irish people and not Private companies?

2. Why can't we take back the the enormous gas field found off the coast of Mayo, find out what the local people want there and come to some sort of agreement and use these resources to our own benefit?

ArmaniJeanss

dusterd wrote: »

I'm not too well informed on the issues concerning the oil and gas that's being found in our waters, so dont slate me if I get it wrong.

1. Do these finds not belong to the Irish people and not Private companies?

2. Why can't we take back the the enormous gas field found off the coast of Mayo, find out what the local people want there and come to some sort of agreement and use these resources to our own benefit?

I'm sure someone will give a fuller answer but quickly

1. The rights belong to the exploration companies, they took the risk of getting a license and spending umpity million doing the exploration whilst we did/spent nothing. We would hope to gain is in being able to get better terms for future licenses for as yet unexplored fields.

2. Again the exploration company took all the financial risks. We could theoretically take this field back, become an international pariah, no other company would be willing to explore (something we dont have the expertise to do ourselves anyway).
It is not an enormous field.
The majority of the local people seem happy with the current situation by the way, you are never going to please certain professional protesters.

happyman81

ArmaniJeanss wrote: »

dusterd wrote: »

I'm not too well informed on the issues concerning the oil and gas that's being found in our waters, so dont slate me if I get it wrong.

1. Do these finds not belong to the Irish people and not Private companies?

2. Why can't we take back the the enormous gas field found off the coast of Mayo, find out what the local people want there and come to some sort of agreement and use these resources to our own benefit?

I'm sure someone will give a fuller answer but quickly

1. The rights belong to the exploration companies, they took the risk of getting a license and spending umpity million doing the exploration whilst we did/spent nothing. We would hope to gain is in being able to get better terms for future licenses for as yet unexplored fields.

2. Again the exploration company took all the financial risks. We could theoretically take this field back, become an international pariah, no other company would be willing to explore (something we dont have the expertise to do ourselves anyway).
It is not an enormous field.
The majority of the local people seem happy with the current situation by the way, you are never going to please certain professional protesters.

If they do hit the jackpot, won't the state benefit through taxing them, or are they tax exempt?

ArmaniJeanss

happyman81 wrote: »

If they do hit the jackpot, won't the state benefit through taxing them, or are they tax exempt?

Yes, but it won't be a huge percentage, generally estimated at somewhere between 10 and 20% after various write offs for the initial exploration costs.
Which would still obviously be fantastic if it was a monster field.

I think the 'jackpot', if there is one, won't be on the initial finds.
The bonanza will be the second phase of finds after (if/when) the initial finds have been proven as being viable and the government/authorities prove capable of allowing the product to be taken up/brought ashore without a Rossport clusterfcuk happening everytime.

stevenf17

happyman81 wrote: »

If they do hit the jackpot, won't the state benefit through taxing them, or are they tax exempt?

The Tax is only chargeable on profits the company would make.
Its currently its between 25-40% of profits, depending on the value of the field.
Which is massively lower than Norway at 78% of profits, but they have a proven track record of finding oil, which is something we don't!
Still 25-40% of something that won't cost us a penny to make is still far better than nothing!

GSF

The find last month was at 7,500ft below the sea level

According to the FT

The definition of “deep” water has been steadily raised; it is still often defined as 1,000ft or more, but much of the industry’s focus is on “ultra-deep” water of 5,000ft or more.

The International Energy Agency, the watchdog backed by the wealthy consuming nations, estimated last year that oil from deep water cost about $35-$65 per barrel to produce

Question is - what is the cost to produce at ultra deep level - its certainly above that $65 per barrel price - possibly much more. So IF oil drops below that level anytime in the next few years you are left sitting on the oil industry equivalent of negative equity!

MrSing

stevenf17 wrote: »

The Tax is only chargeable on profits the company would make.
Its currently its between 25-40% of profits, depending on the value of the field.
Which is massively lower than Norway at 78% of profits, but they have a proven track record of finding oil, which is something we don't!
Still 25-40% of something that won't cost us a penny to make is still far better than nothing!

Not doubting you but do you have a source for that info?

Scofflaw

MrSing wrote: »

Not doubting you but do you have a source for that info?

http://www.dcenr.gov.ie/NR/rdonlyres/E226421F-47B6-42DB-9458-C5EF0EE61930/0/PetroleumTaxationinIreland.pdf

GSF wrote:

The find last month was at 7,500ft below the sea level

Question is - what is the cost to produce at ultra deep level - its certainly above that $65 per barrel price - possibly much more. So IF oil drops below that level anytime in the next few years you are left sitting on the oil industry equivalent of negative equity!

The find is at that depth, but the water depth is only 100m. And 7500 foot for rock depth is relatively shallow - the deepest well I was on was 20,000 foot, and that's 20 years ago.

However, we can make a stab at an answer to the question anyway - if Providence regarded the find as commercially viable at 1800 barrels/day, their expected costs are somewhere south of €190k/day. Given the flow rate is about twice that, presumably the oil price would need to drop to half its current level to make the field (or well, at the moment?) unprofitable.

cordially,
Scofflaw

AllGunsBlazing

This is a bit ironic. Just last night RTE were showing a documentary movie on the death of the electric car in the US.

Watching it left me cursing the west's dependence on oil. Don't feel quite so strongly on the subject now for some reason.....

stevenf17

MrSing wrote: »

Not doubting you but do you have a source for that info?

The document that Scofflaw found and this one too! (pg 10)
http://www.siptu.ie/media/media,14689,en.pdf

sc000by

You can be sure as soon as Shell To Sea land in the guards will be right behind them:

http://www.youtube.com/watch?v=H-WZFn3S-iw&feature=share

tayto lover

That's German oil then. Everything we own will be given to the Germans. They own us now.

happyman81

tayto lover wrote: »

That's German oil then. Everything we own will be given to the Germans. They own us now.

Dumbest comment so far.

Farmer Pudsey

I doubt if it is 1 Billion barrells as the flow is only supposed to be 2000 barrells a day it will take 1369 years to bring it all ashore

NakedNNettles

AllGunsBlazing wrote: »

This is a bit ironic. Just last night RTE were showing a documentary movie on the death of the electric car in the US.
Watching it left me cursing the west's dependence on oil. Don't feel quite so strongly on the subject now for some reason.....

Ya, I know what you mean.

There's nothing quite like getting to the ars%end of a petrol swilling guzzler and getting those nostrils right into the tailpipe, fumes, pure beauty.

You just don't get the same kick with clean air.

Anyway a nice pitch from Providence but as they say on Dragon's Den, I won't be investing, i'm out!

skafish

Dont forget that there will also be a return to the country from jobs created as well. Mind you, I assume there wont be thousands of them, but if the oil field is run from, say Cork harbour, there will be a pretty big local spend with all the resultant benifits.

smcgiff

Farmer Pudsey wrote: »

I doubt if it is 1 Billion barrells as the flow is only supposed to be 2000 barrells a day it will take 1369 years to bring it all ashore

Maybe within the 1,369 years some clever so and so suggests they build a second or even third rig :rolleyes:

I doubt if there's a billion barrels but would imagine there's more than 60m

happyman81

smcgiff wrote: »

I doubt if there's a billion barrels but would imagine there's more than 60m

Why?

smcgiff

happyman81 wrote: »

Why?

One is too good to be true and would be large enough to have attracted more interest by now. And the other is too low considering the size of area and considering what's been found so far.

Rhys Essien

"I doubt if there's a billion barrels but would imagine there's more than 60m[/QUOTE]


Watch the 2 videos here from Providence.
(scroll down page)

http://www.providenceresources.com/sel%201-11.aspx

smcgiff

Watch the 2 videos here from Providence.

http://www.providenceresources.com/sel%201-11.aspx

I've not watched the company's video - their purpose is to maximize shareholder wealth.

happyman81

Rhys Essien wrote: »

"I doubt if there's a billion barrels but would imagine there's more than 60m

Watch the 2 videos here from Providence.

http://www.providenceresources.com/sel%201-11.aspx[/QUOTE]

Well, if PR said it, it must be true.

In other news, happyman81 is the world's greatest lover.

:rolleyes::rolleyes::rolleyes:

crackcrack30

I'd be very cautious about this, and keep my investment money in my pocket, there is nothing new about whats 'known' oil off the south coast, i got caught up in this about 10 yrs ago at my cost, this business runs on hype, spin and publicity........ i think > than 5000 barrels a day was required back then to be in the green, costs, livingstandards ect have increased inline with this,
I doubt there will be any benifits of this to the public, there is no guarantee that oil will ever be extracted or viable in that area without additional wells to compliment it.....

Could it be spin to 'soften the cough' of oppisition in the dublin bay project?

And finally oil changes hands in some cases up to 30 times before you the last buyer fills up at the pumps at todays prices....

FreudianSlippers

Scofflaw wrote: »

http://www.dcenr.gov.ie/NR/rdonlyres/E226421F-47B6-42DB-9458-C5EF0EE61930/0/PetroleumTaxationinIreland.pdf



The find is at that depth, but the water depth is only 100m. And 7500 foot for rock depth is relatively shallow - the deepest well I was on was 20,000 foot, and that's 2 years ago.

However, we can make a stab at an answer to the question anyway - if Providence regarded the find as commercially viable at 1800 barrels/day, their expected costs are somewhere south of €190k/day. Given the flow rate is about twice that, presumably the oil price would need to drop to half its current level to make the field (or well, at the moment?) unprofitable.

cordially,
Scofflaw

I've never been more curious about what someone on the internet does for a living before.

Scofflaw: economics master, oil Barron and lover of valediction.

Nody

FreudianSlippers wrote: »

I've never been more curious about what someone on the internet does for a living before.

Scofflaw: economics master, oil Barron and lover of valediction.

You forgot Oppressor of the free word :eek: /runs and hides in the corner

Sorry, lets get back on the topic. I was speaking with a financial director of Shell a while back and he mentioned something very interesting to the point earlier regarding profit and price. Shell makes basically no money of the fuel sold at the station (i.e. the Shell branded station's profit margin); any money they make is from the extras. This is also something I've heard from other companies which brings up the question of were is the profit then stored? As in Shell makes a lot of money but what is the really profitable part(s) in the chain? The drilling (at 50 Mil a pop)? The refinery? The transport?

murphaph

Nody wrote: »

As in Shell makes a lot of money but what is the really profitable part(s) in the chain? The drilling (at 50 Mil a pop)? The refinery? The transport?

The Revenue

It's fairly well know alright that the profit per litre in Germany on petrol is currently app. 1c. That's all the retailer makes (according to our AA equivalent magazine). So yeah, I wonder who makes the rest-the government takes a huge chunk of the pump price. In the UK it seems to take about 70% of the total, I presume it's similar across Europe.

http://www.whatprice.co.uk/petrol-prices/cost-litre-breakdown.html

antoobrien

smcgiff wrote: »

I've not watched the company's video - their purpose is to maximize shareholder wealth.

And if the shareholders feel they have been intentionally misled they can sue, so the information that will be put in the public domain will be carefully vetted.

That's not to say that it should be treated as gospel, but by the same token it can't be dismissed as utter propaganda either.

happyman81

antoobrien wrote: »

smcgiff wrote: »

I've not watched the company's video - their purpose is to maximize shareholder wealth.

And if the shareholders feel they have been intentionally misled they can sue, so the information that will be put in the public domain will be carefully vetted.

That's not to say that it should be treated as gospel, but by the same token it can't be dismissed as utter propaganda either.

Except for the fact that PR have been known to do exactly what has been stated several times in this thread, including a former shareholder (me). I lost count of how many times this lot struck into a 'major find', went to the press with flashy videos to sucker in the ignorant public and then it turns out to be nothing. Over and over again. Even the bank manager who acted as the merchant for my shares made light hearted jokes about this when I sold my shares. I have also already stated this in the thread. Other posters have corroborated this behaviour of theirs.

It is highly likely to be bull****, but alas, there will always be fresh suckers out there to buy shares in PR.