Providence in final stages of concluding contracts for Barryroe drilling program
- Project & Tenders
Irish operator Providence Resources has made progress on key operational contractual arrangements for its planned multi-well Barryroe drilling program offshore Ireland, which is scheduled to start in 3Q 2019.
In September, Exola and Lansdowne signed an updated farm-out agreement with APEC Energy, a privately owned Chinese company, over Standard Exploration Licence (SEL) 1/11 which contains the Barryroe oil accumulation. SEL 1/11 is operated by Exola (40%), a Providence subsidiary, on behalf of its partners, APEC (50%) and Lansdowne (10%).
Under the terms of the updated farm-out agreement, APEC is providing a fully cost-carried firm program comprising of the drilling and testing of four vertical wells and one horizontal side-track, plus the optional drilling of two additional horizontal wells, together with cash advances to Exola for certain agreed project and operational costs totaling $19.5 million.
Providence said on Friday, December 28 that, over the past three months, the Barryroe partners had been working on progressing multiple work streams to deliver the drilling program, including the contractual arrangements with key service providers.
To effect this drilling program, the Barryroe partners have nominated China Oilfield Services Limited (COSL) as the key project contractor. The Barryroe partners are in the final stages of concluding an Integrated Project Management Contract with COSL, who are to be contracted to provide all services and equipment required to conduct the drilling program, including the provision of the nominated semi-submersible drilling unit.
Postponement of Barryroe survey
In November, an application for a judicial review was taken by An Taisce against the Minister of Communications, Climate Action and Environment and the Attorney General of Ireland, challenging the legality of the permission granted to Exola to conduct well-site survey operations at Barryroe. This matter between An Taisce and the State has been subsequently adjourned until January 15, 2019.
As reported on November 30, 2018, noting the potential delay and uncertainty that such a review could have caused, the Barryroe partners took a decision not to act on the well site survey permission with immediate effect. As a result of this voluntary decision not to act on the well site survey permission, Exola elected to postpone the planned well site survey for 4Q 2018. Accordingly, Exola will now apply to the Minister for a new permission to carry out well site survey activities as early as practicable in 2019.
Barryroe drilling program
Without prejudice to the site survey application process, Exola is planning to be in a position to conduct its well-site survey operations in spring 2019.
Separately, other consenting workstreams required to conduct the drilling program are underway, and subject to the conclusion of contractual arrangements, and the receipt of requisite approvals and consents from the relevant authorities, the updated timeline for the beginning of the drilling program is 3Q 2019.
In October, the company said it might start drilling on Frontier Exploration Licence (FEL) 6/14 that contains the Newgrange Prospect in 2019 or 2020, boosted by independent Newgrange data analysis results. FEL 6/14 is operated by Providence Resources, on behalf of its partner Sosina Exploration (20%).
Following the acquisition of a site survey during the summer over the proposed Newgrange well location, subsequent detailed analysis of the survey data has confirmed the presence of 262 seabed pockmarks with seabed samples demonstrating both biogenic and thermogenic hydrocarbon sourcing signatures indicating a potential link to active hydrocarbon migration.
Providence stated that discussions with potential third-party farminees continue and depending on the outcome of these discussions, drilling could take place in 2020.
Preparation for Dunquin survey
In November, partners in Frontier Exploration License (FEL) 3/04 located in the southern Porcupine Basin offshore Ireland approved the budget for a well site survey over the Dunquin South prospect, which is a condition for drilling an exploration well on the prospect.
FEL 3/04 is operated by Eni (36.913%) on behalf of its partners, Repsol (33.557%), Providence Resources (26.846%) and Sosina Exploration (2.684%).
In agreeing the 2019 work program and budget, the FEL 3/04 partners have sanctioned the acquisition of a well-site survey over the Dunquin South prospect next year.
Tony O’Reilly, Chief Executive of Providence, said: “2018 has been another year of significant progress for Providence with our main focus being the finalization of the Barryroe farm-out in advance of the implementation of a multi-well drilling program planned to start in 2019. Importantly, this program provides a roadmap to take this project, subject to the results of the drilling & regulatory consents, to project sanction and then on to production.”
Finalizing rig arrangements
O’Reilly also said: “We are pleased to report that good progress has been made on finalizing the key operational and rig arrangements with COSL, the conclusion of which will allow us to advance the specific consents for the drilling program. We were obviously very frustrated by the delay to the planned site survey, especially as we had complied fully with all environmental and planning regulations in applying for and subsequently receiving the site-survey operational consent. With the site-survey permission being subject to a legal challenge and the vessel being delayed due to bad weather elsewhere, we felt that it was in the best interest for the overall program not to act on the granted site-survey permission and re-apply, thereby avoiding any unnecessary costs and possible further delays associated with the judicial review proceedings.
“Whilst this rescheduling will delay the planned commencement of drilling at Barryroe, we believe that it does not materially impact the timing of the overall delivery of this significant drilling program. Subject to contract finalization and the receipt of all necessary permits and consents, we currently envisage rig mobilization and drilling to commence in Q3 2019.”
O’Reilly added: “Elsewhere in our portfolio, we continued to advance a number of high impact exploration prospects in the Atlantic Margin. With Providence having an interest in four significant exploration prospects (Diablo, Dunquin South, Avalon and Newgrange) in the southern Porcupine Basin, we will keenly follow the CNOOC-Nexen/ExxonMobil Iolar well, which is planned to be drilled in the basin next spring.”
He further said: “Looking ahead, we will continue to focus on delivering our various programs and here, with the planned program at Barryroe, we continue to be by far the most active player offshore Ireland in terms of drilling activity, commercial deals and collaborations with world-class partners.”
In conclusion, Providence said it remains very optimistic about the future prospects for the company.