CAPITAL: Dublin

MONETARY UNIT: Irish Pound

REFINING CAPACITY: 61,750 b/cd

OIL PRODUCTION: 0

OIL RESERVES: 0

GAS RESERVES: 700 bcf

Ireland`s Department of Marine and Natural Resources offered the Seven Heads oil discovery and frontier acreage in the South Porcupine basin for leasing.

Esso Ireland Ltd. found the small Seven Heads oil and gas field in 1974 and later released the block.

Companies had until Apr. 8, 1998, to apply for a 3-year lease covering four half-blocks containing Seven Heads: 48/23 South, 48/24 South, 48/28 North, and 48/29 North.

Seven Heads is in 100 m of water, 50 km from shore and 20 km southwest of Kinsale Head gas field. The four half-blocks on offer cover 520 sq km.

Four wells had been drilled in the field. Three produced hydrocarbons, and the fourth had shows.

Ireland also offered 156 blocks in the South Porcupine basin off western Ireland, covering more than 40,000 sq km. Bids were to be filed by Dec. 15, 1998.

Only one well had been drilled in the basin, a dry hole. Water depth ranges from 200 m to more than 2,500 m.

Because of the frontier nature of the acreage, licenses will run for 15 years beginning Mar. 15, 1999, compared with 12 years for deepwater and 6 years for standard acreage.

License holders must acquire seismic data in the first 3 years then drill a well or relinquish some or all of the block. Discoveries developed before 2013 will qualify for a special 25% tax rate.

WoodMac study

A study by Wood Mackenzie Consultants Ltd., Edinburgh, said Ireland had little chance of developing a successful oil industry in the short-to-medium term, but the frontier Atlantic Margin holds promise.

The Atlantic Margin runs from west of Ireland to west of the Shetland Islands off northern Scotland.

The study noted 132 exploration and appraisal wells drilled off Ireland had resulted in only two field developments.

It said, "In the near-to-medium term only three minor developments located in the Celtic Sea can possibly be forecast. Two are marginal oil and gas structures.

"The third, Southwest Kinsale, is expected to be developed as a gas storage facility. This will help provide seasonal swing for the growing Irish gas market as existing output from Kinsale Head becomes depleted."

Wood Mackenzie said changes in recent years to Ireland`s petroleum legislation had encouraged interest in the Atlantic Margin frontier area, leading to licensing of substantial acreage off the west coast.

In mid-1997, Ireland issued 11 exploration licenses covering 58 full and partial blocks in the Rockall Trough area off western Ireland.

Water depths range from 500 m to more than 2,500 in the center of the trough. In March 1996, companies had been invited to bid for 615 full and partial blocks.

Discoveries

Ireland`s hopes to become an oil producer were dashed when Statoil (U.K.) Ltd. saw disappointing results from an appraisal well at its Connemara discovery.

Initial reserves estimates for Connemara Block 26/28 were 40 million bbl with potentially twice that much.

But testing of the 26/28-A2 appraisal well was cut short when flow rates were low and pressure in the well dropped faster than expected. Connemara was later declared uncommercial.

Wood Mackenzie said, "This has not only delayed first production of Irish oil but also affected the possible commerciality of any new discoveries in the area that might have been able to use the infrastructure."

It said the Block 49/9 Helvick discovery was estimated to have reserves of 6 million bbl. Development was being considered in conjunction with the nearby 60 bcf Ardmore gas structure.

It said the Seven Heads reservoir covers a large area but is thin. Reserves could be 5 million bbl of oil and 100 bcf of gas.

Wood Mackenzie said Seven Heads may be developed as a satellite of existing Kinsale Head field.

Southwest Kinsale lies beneath Kinsale Head gas field. It was initially earmarked for development through Kinsale Head facilities but was now expected to be developed as a gas storage facility.

The reservoir was thought to hold reserves of 30 bcf of gas, 10 bcf of which was thought to be "cushion gas" and the other 20 bcf available for seasonal depletion. The reservoir was thought capable of delivering 50-200 MMcfd.

Exploration plans

Wood Mackenzie said basins off West Ireland have been reinterpreted in the light of exploration successes along the Atlantic Margin in the U.K.`s West of Shetland area and in the Norwegian Sea.

"The recent revival in exploration activity has so far proved successful. Enterprise discovered Corrib North gas structure in 1996, and Marathon was thought to have recently made a gas discovery in the Porcupine basin with well 35/30-1.

"Enterprise Oil plc is expected to drill two Atlantic Margin wells in 1998. One will appraise Corrib North and one in another Porcupine basin block."

Corrib North reserves have been tentatively pegged at 1.5 tcf of gas. Marathon Petroleum Ireland Ltd. and Statoil were both planning exploration wells west of Ireland in 1998.

Wood Mackenzie said, "Future levels of exploration are likely to be maintained at 3-4 wells/year in the Atlantic Margin basins alone."

It said initial results indicate the Atlantic Margin of Ireland is gas prone, since there are no oil discoveries large enough to be developed, "but new oil discoveries are a distinct possibility."

ARCO Ireland Offshore Inc., Anadarko Ireland Co., and BG Exploration & Production Ltd. formed an alliance to assess the hydrocarbon potential of recently awarded acreage off western Ireland.

The companies have equal interests in nine tracts awarded in the 1997 Rockall Trough licensing round. ARCO operates two of the blocks, and BG operates four full blocks and two partial blocks.

Total Oil Marine plc and Saga Petroleum AS formed an alliance for deepwater exploration and development along the Atlantic margin.

The companies planned to apply jointly for acreage and pool their know-how and resources. They have mutual interests in the area since Saga bought Santa Fe Exploration (U.K.) Ltd. in 1996.

Onshore

Statoil reached a processing deal with the state-owned operator of Whitegate refinery near Cork, Ireland. The deal guarantees product supplies to Statoil`s 350 retail outlets in Ireland.

It calls for Statoil to deliver 14,000 b/d of crude for refining, or roughly 25% of the plant`s capacity. Volumes can be increased later. Statoil will close a small tank farm near Whitegate.

Statoil also agreed to supply 264 million cu m of gas to Ireland`s Bord Gais Eireann (BGE).

The gas will be produced in Froey field off Norway and sent to Ireland via the Frigg line to St. Fergus, Scotland, and from the U.K. grid in Scotland to Ireland via a new line.

BGE planned to expand its customer base 18% by 2000 through an extension of its gas grid to towns around Dublin and Cork.

BG plc planned to sell an interest in its Northern Ireland gas supply venture, Phoenix Natural Gas, to a partnership of Mountain Fuel Inc., Salt Lake City, and Northern Ireland Electricity plc.

It was expected to sell about 24.5% for around $75 million.

BG plc, one of two companies created from the defunct British Gas plc, sold a 24.5% stake in its Northern Ireland subsidiaries to Brooklyn Union Gas Co., New York.

Phoenix Natural Gas had an exclusive license to bring natural gas supplies to commercial and residential customers in the province.

BG`s Premier Transco Ltd. unit owned and operated the gas pipeline from Scotland to Northern Ireland, completed in August 1996, as well as Ballylumford power station.