Oil and Gas Prospects

Ireland’s Energy Opportunity

Ciarán Ó hÓbáin

Department of Communications,

Energy and Natural Resources

17 October 2012

Presentation Outline

Exploration activity levels offshore Ireland

Looking forward – 2013/14

Challenges faced by industry\regulators

Unconventional gas exploration

Public debate, especially on tax terms

Ireland increasingly attractive for investors

Government role going forward

Conclusions

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Year

Nu

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O (

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Number of Offshore Exploration Licences and Licensing Options at end December each year (1970 - end April 2012)

Exploration Licences

Authorisations issued

prior to 1976 were

Petroleum Leases

Licensing Options 1998-2012

End of year information for Licensing Options

prior to 1998 is in offsite archive and not readily accessible

LICENCES AND LICENSING OPTIONS

Number of Exploration Companies (2000 - 2011)

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-6

-4

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8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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mp

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Companies Departing

Companies Entering

Net Change in Number of Companies Active inIreland

Number of Exploration Companies (2000 - 2011)

-10

-8

-6

-4

-2

0

2

4

6

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Nu

mb

er

of

Co

mp

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Companies Departing

Companies Entering

Net Change in Number of Companies Active in Ireland

Looking forward to 2013/14

Barryroe, appraisal work to continue

Renewed active interest in the Celtic Sea

Increase in drilling activity levels

Some very interesting wells being planned

Decisions by 13 Licensing Option holders

New data acquisition

Next Licensing Round?

Backdrop at EU and International Level

Ever greater level of scrutiny post Macondo

Ireland, additional oversight measures for

drilling

EU legislation on Offshore Safety

Further EU intervention on environmental

liability?

Shale Gas Exploration

Three onshore Licensing Options granted 2011 - Cavan, Clare, Leitrim, Roscommon and Sligo

Work is primarily of a desktop study nature

Drilling not allowed under these Licensing Options

EPA published preliminary research May 2012

EPA scoping a further more comprehensive study

Minister confirmed no hydraulic fracturing until results of EPA research have been considered

Public Debate on Licensing Terms

Attracts considerable media attention

Tax terms especially, Compare like with like?

Myths can quickly become facts

Nature of reporting by Industry has an

impact!!

Some Quotes – Irelands Tax terms

“Government approves scandalous give away of

Ireland’s remaining offshore prospects” (Colm

Rapple, Irish Mail on Sunday, 20 June 2010)

“Time to take tough decision on oil and gas”

(Fintan O’Toole, Irish Times, 4 January 2011)

“Oil conjures up every lazy stereotype of the

ruthless multinational plundering our assets”

(Kevin Myers, Irish Independent, 7 January 2011)

Some Myths

Tax terms with write off of exploration expenditure

means almost no tax revenue for Ireland

Should focus on renewable energy and leave gas in

ground

Leave in ground until price goes up

No obligation to land\sell in Ireland means likely to

be developed and sold elsewhere

Some Very Recent Quotes

“None of the finds being talked about

are so great as to dwarf the exploration

costs”

"We are very excited about it. We think

we could be on the verge of a huge oil

and gas find"

Ireland – Attractive for Investors

Prospectivity - Since 2000 Ireland has had four new

discoveries from only 14 wells, Dooish, Bandon, Old

Head and Schull

Strong market demand, import dependent

Extensive all island gas network

Interconnectors with UK (a net gas importer)

Modern appropriate regulatory framework

Regulatory Framework

2006 Critical Infrastructure Act

2010 Petroleum Safety Act

Foreshore Licence process to be combined with

Critical Infrastructure assessment process

Corrib pipeline – application to consent in 9 months

Transparency, maximising access to information and

meaningful public consultation are all critical

Government role going forward

Maintain effective regulatory framework

Continue to promote investment opportunity

Continue to support, encourage, develop and

participate in research projects

Take steps to address data gaps

Develop and manage appropriate and

innovative licensing initiatives

Conclusions

Interest and activity levels on increase

Some encouraging recent results

Drilling levels low, but set to increase over next few

years

Strong demand and good access to market

Modern regulatory framework that is fit for purpose

Need for more drilling and to broaden area of focus

Atlantic Ireland Conference 12 November