ONE OF THE great myths in Irish public life is that various governments have willingly thrown away the chance of making a fortune from oil and gas exploration.
Generally, the narrative goes that Ireland could make a killing with the state-led exploration of its seas, uncovering oil and gas fields left and right, making the riches from Norway’s industry look like chump change.
In reality, private exploration companies have spent billions drilling at 160 sites in Irish waters since the 1970s. Just four commercial gas projects have come from this, with no commercial oil wells.
Much of the excitement around a supposed oil and gas goldmine came after 2012, when Irish firm Providence Resources announced a potentially enormous find off the coast of Cork.
The Barryroe field is estimated to hold around 300 million barrels of recoverable oil. If it ever sees the light of day, it would be Ireland’s first commercial oil field.
It would also likely be the last, as in 2021 the government banned further oil and gas exploration. Existing licences will be honoured, but that’s it. Of the existing licences, Barryroe had looked by far the most likely to actually happen.
Providence has since been been renamed Barryroe Offshore Energy – a sign of how crucial the project is to the firm, as it focuses all of its energy on getting the field up and running.
However, in May it announced that Eamon Ryan, the Green Party leader and minister for environment, climate, communications and transport, had refused permission for a ‘lease undertaking’ – a key permit needed to progress the site.
The reason given was that Ryan was not “satisfied with the financial capability of the applicants”.
Less than a month later, Barryroe released a new statement saying it had just €176,000 of working capital left. It said this was enough money to sustain its operations for “approximately three weeks”.
The firm said Ryan’s “surprising” decision had scuppered its plans to raise €20 million from the market, and it is now locked in talks with its major shareholders for desperately needed funds.
If the end of the month arrives without a new source of cash materialising, Barryroe said it would consider winding down its operations and going into liquidation – likely spelling the end of the Irish oil well.
This is despite the fact that the company has already run through a fortune over the years, raising approximately €270 million from private investors during the last decade.
The controversy comes at a pivotal time in the debate over fossil fuels. The oil and gas exploration ban was meant to be a sign from the government of its intent to move away from fossil fuels, after committing to cut Ireland’s emissions in half by 2030.
Announcing the move back in 2021, Eamon Ryan said: “By keeping fossil fuels in the ground, we will incentivise the transition to renewable energy and put ourselves on a pathway to net zero by 2050.”
But the uncomfortable truth is that Ireland is still horribly reliant on fossil fuel.
European statistics agency Eurostat has said that approximately 45% of the nation’s energy comes from oil. While that percentage has reduced slightly in recent years, Ireland is still one of the most oil dependent countries in Europe, and all of it is imported.
Proponents of Barryroe say projects like it would reduce Ireland’s reliance on foreign fuels and help make our sources of energy more secure. However, industry figures have said the ‘mood music’ from the Irish government makes it hard for exploration firms to get funding, even when licences are already in place.
But there are serious misgivings from many quarters about developing an oil well as the effects of climate change become more apparent, despite claims of hypocrisy over how Ireland continues to import oil from abroad.
However, the government has said concerns around energy supply and its policy of phasing out of fossil fuels “did not form part of the assessment process” for Barryroe.
Even if the company gets the thumbs up from government and secures another funding source, there is no guarantee that oil would be pumped in Ireland. It has been there before. Barryroe Offshore has been trying to develop the project for more than a decade without success.
This has been largely due to its difficulty in finding a partner to carry out the further development work needed before a commercial well is set up. It’s estimated this work could cost around €200 million. Based on its statement saying it had just €176,000 in the bank, Barryroe is nowhere close to having that kind of money.
This is why the firm has spent the last decade looking for a ‘farm out partner’ – a bigger company which will stump up much of the cash to develop the well, in return for a stake in the project. But there have been a string of false dawns.
In 2015, Barryroe looked like it had a partner, a UK firm called Sequa Petroleum, ready to go to develop the site, but then funding never materialised.
It was a similar story in 2019, when Barryroe appeared to have secured backing from a Chinese firm called Apec. While it put up an initial $9 million, a further promised $9 million loan never materialised, resulting in the partnership falling apart.
Barryroe’s share price has since collapsed and is a fraction of its value after the find in 2012, as investors worry about its ability to deliver on the sole project the company’s existence is based on.
Throughout this piece, you may have noticed a lot of qualifiers around all of this – ‘estimated’, ‘potentially’, ‘could’. This is because nothing is certain with Barryroe.
Even if Barryroe Offshore pulls another rabbit out of its hat, there’s still a long way to go before a drop of oil comes out of the ground.
And with the ‘mood music’ for fossil fuel companies very clear, if this project doesn’t get off the ground, it seems almost impossible another will.
To embed this post, copy the code below on your site
have your say