Offshore Ireland Still Makes Sense in a Low Oil Price World

For the Kosmos/Europa prospects – dubbed Wilde, Beckett and Shaw – on FEL 3/13, Mackay told Rigzone that Europa called in independent consultants ERC Equipoise in order to review them.

"So, these prospects have been peer reviewed by Kosmos, Europa and ERC. Our resources are slightly different to Kosmos' but nevertheless the headline number is about the same: 1.5 billion barrels across the three prospects, gross, mean and un-risked. Clearly there is quite a large potential resource out there in water depths of between 1,400 and 1,800 meters," he said.

Drilling on the Porcupine 'Will Never be Cheaper than it is Now'

Mackay is clearly pleased that ERC Equipoise's analysis confirms that the prospects could be as large as 1.5 billion and he told us that the next step will be to drill.

"We're certainly very enthusiastic about these prospects. We feel they have got good technical support. We've also put out what the risks are," Mackay said, referring to the chance of success on each prospect being estimated at between 13 and 19 percent respectively.

"So, really now the ball is in Kosmos' court. We understand that they would like to farm down because currently they would have to pay for 100 percent of the well costs because they are carrying us; there's only two of us in the block. So, I anticipate that they will be launching a farm-out later in the year, after the Atlantic Margin licensing round closes in September."

But the drilling of a well on FEL 3/13 will not likely occur before 2017.

"2017 would be the earliest. For these deepwater wells they take a minimum of 12 months to prepare for. So if you wanted to drill in May 2017, you'd have to commit to drill in May 2016."

And finding a rig to drill a well in the Porcupine should be no bother given the current scarcity of work for drilling contractors amid the low oil price environment.

"What we are hearing at the moment is that rig rates are of the order of $300,000 to $350,000, and there appears to be plenty of spare capacity on the market. So, from a rig cost point of view, now is the time to be drilling a well. Of course, the problem is that this is also coinciding with a period of low oil prices, when a lot of companies are cutting back on exploration, so it’s a bit of paradox because if you want to drill on the Porcupine it will never be cheaper than it is now."


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