The company continues farm-in discussions for the Barryroe oil field (Providence 80%, operator), and is considering a drilling proposal for a £16-million ($22.9-million) appraisal well from an alliance of contractors under a risk-sharing cost model.
This alliance comprises a major rig contractor and a drilling management and well service company.
Evaluation of the Barryroe upper gas-bearing C-Sand reservoir has confirmed significant productivity and resource potential across the eastern portion of the offshore SEL 1/11 license and the southern portion of OPL 1, with modelled initial vertical well production rates of up to 30 MMcf/d.
There appears to be in-place gas of up to 400 bcf.
Discussions have started on potential development synergies with owners of nearby existing gas production infrastructure.
Ireland’s government has also granted a two-year lease undertaking from March 1 that will allow for low-cost development studies for the Helvick oil discovery.
This award will trigger a staged 50% farm-in by Marginal Field Development Co. (MFDevCo, ex-ABT Oil & Gas) starting with an initial 10% interest, subject to ministerial consent.
The remaining equity assignment of up to 40% is based on an agreed work program, receipt of a petroleum lease from the minister, and approval of any subsequent field development plan.
Another agreement, signed in 2010, to assign 10% in Helvick to Lansdowne Celtic Sea can also now be completed, although this will be scaled back to 9% (subject to consents) to accommodate MFDevCo.
Finally, the government has granted a two-year lease undertaking for the Dunmore oil discovery, effective from March 1, to allow for evaluation of low cost development options. This triggers similar arrangements with MFDevCo.
Other partners in Helvick and Dunmore are Atlantic Petroleum and Sosina Exploration.
Next month Providence Resources plans to start a farm-out process for the Silverback prospect in the South Celtic Sea basin. Here results from a geochemical study indicate source potential from the Liassic and Carboniferous.
Tony O’Reilly, the company’s CEO, said: “Despite the difficult operating environment, Providence has continued to progress its activities across its portfolio of assets in the Celtic Sea basins. The Barryroe farm-out remains our key focus and whilst we are not yet in a position to confirm the structure of a transaction, we continue to work to that end. In that regard, the most recent cost dynamics illustrate the highly competitive new cost environment for drilling.
“Whilst our priority remains firmly fixed on appraising and subsequently developing the more extensive main Basal Wealden Barryroe oil resources, the recent OPL 1 option agreement has brought the overlying C-Sand gas potential very much into focus. Given the proximity of the existing nearby gas infrastructure and available capacity, we have commenced discussions with the owners of the existing infrastructure as to whether part or all of their infrastructure could play a role in accelerating any development of the Barryroe gas resources.
“Whilst Helvick and Dunmore are relatively small oil accumulations, the work completed to date has illustrated that the fields could be commercially developed due to both the highly productive nature of the main reservoir intervals as well as the current low development capex. The granting of the lease undertakings, together with the staged farm-in by MFDevCo, are the next logical pre-development steps.”
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