Page 7 - Euroil Week 38 2019

EurOil COMMENTARY EurOil
Ireland to block offshore oil
exploration
The industry wants clarity on what this new policy will mean for their projects
IRELAND
WHAT:
Ireland will phase out oil exploration, according to its PM.
WHY:
The government has taken advice from
its climate council. Exploration for gas will continue given its role as a “transition fuel”.
WHAT NEXT:
The industry needs clarity on how this new policy will be implemented.
IRELAND’S government plans to phase out offshore oil exploration because of climate concerns, while continuing the search for gas because of its role as a “transition fuel”, Irish PM Leo Varadkar said on September 23.
The move comes after Varadkar’s own gov- ernment prevented a bill imposing a blanket ban on exploration from becoming law earlier this year.
At his speech at the United Nations Climate Action Summit, Varadkar said the government had taken a decision based on advice from its cli- mate change advisory council.
“In the last week, on foot of a request from me, our independent Climate Change Advisory Council recommended that exploration for oil should end, as it is incompatible with a low-car- bon future,” he told the summit. But he added that exploration for gas would continue as it rep- resents a “a transition fuel that we will need for decades to come while alternatives are developed and fully deployed.”
Ireland relies on several large offshore gas deposits to meet around 60% of its consumption, although output at these fields is now declining, with lobbyists calling on the government to do more to advance new projects to avoid increased imports. In contrast, no oil discoveries have been made in Ireland, although several early-stage appraisal projects are underway. One such pro- ject is Barryroe site off the south coast of Ireland, where local explorer Providence Resources is partnered with China’s Apec Energy and another Irish firm Lansdowne Oil & Gas. The group aim to start drilling in 2020.
In a letter addressed to the government and shared by Virgin Media News reporter Gavan Reilly on Twitter, Ireland’s climate council con- cluded “that the exploration for, and recovery of new offshore oil reserves is not compatible with a low carbon transition.”
“However, natural gas has been identified internationally as an important transition fuel, as the global energy system switches from carbon intensive fossil fuels to low-carbon and renewa- ble systems on the way to complete decarbonisa- tion,” it continued.
New gas discoveries could lead to “improved energy security,” the council said, but that recovery “should be contingent on the associated deployment of decarbonisation technologies.”
Varadkar’s policy announcement comes after
his government in July cited a “money message” – a provision in the Irish constitution that can prevent laws if they increase public spending – to block the Climate Emergency Bill, proposed by opposition politicians to significantly curb the award of new exploration licences.
The bill would likely have been unworkable in practice anyway, causing Ireland to incur heavy losses from obligations to existing permit hold- ers, such as the refund of application and other fees. Operators may have also challenged the legislation in court.
Details, details
Following Varadkar’s remarks, Ireland’s oil and gas industry quickly sought clarity on the gov- ernment’s policy. The government confirmed late on September 24 that existing oil and gas licences would not be affected.
The Irish Offshore Operators’ Association (IOOA) responding saying it “welcomes the clarification today from the government that existing exploration licences will be unaffected.”
Shares in many Irish oil and gas companies plummeted after Varadkar’s speech only to recover after the government’s clarification.
“However, it is important that further clarity is given on how the government’s proposal for future licensing rounds will be implemented,” IOOA CEO Mandy Johnston said. “With this in mind and as a representative body invest- ing considerably in offshore Ireland we are seeking a meeting with [Natural Resources] Minister [Sean] Canney at the earliest possible opportunity.”
According to an Irish Times report, Climate Minister Richard Bruton is set to disclose a plan within a month on how the new policy will be implemented. The newspaper quoted as spokes- woman for Varadkar as saying that no new licensing contests would be held for the Atlantic “closed” area, representing 80% of Ireland’s off- shore zone.
“Licence applications will still be accepted for [the] Celtic and Irish Sea on an ongoing basis,” she said.
A key concern is how the government intends to continue issuing licences for gas but block those for oil, as operators often find both together. And at unexplored blocks, it is some- times uncertain whether target reservoirs hold mostly oil or mostly gas until drilling is under- taken. ™
Week 38 26•September•2019 w w w . N E W S B A S E . c o m P7