Changing perceptions

Irish Offshore Operators’ Association (IOOA) chair Pat Shannon talks to Owen McQuade and reflects on his involvement with the Irish oil and gas sector and how technological advances have helped change the thinking about offshore Ireland.

Pat Shannon has been involved with the Irish oil and gas sector for nearly 40 years. He started with the Government’s Petroleum Affairs Division (PAD) in 1979 and went on to be its Principal Geologist. In 1983 he left to set up a petroleum geology masters course and the Petroleum Geology research group at University College Dublin. He retired from UCD last August as Chair of Geology in the School of Geological Sciences. Just prior to his retirement from UCD he took up the chair of the IOOA, “a new and exciting opportunity to stay with the industry but do something slightly different.”

Offshore Ireland: Exploration history

Shannon has seen the development of the Irish offshore sector at first hand since the late 1970s and is the foremost authority on oil and gas exploration offshore Ireland. The Irish offshore story is one of how technology has led to new thinking about the geology of the area.

Starting in the 1960s acreage was granted to Esso and Marathon in the Celtic Sea, with the first offshore well drilled in 1970. The first licensing round was held in 1975 and a new phase of drilling beginning the following year. When Shannon joined PAD in 1979 there was significant exploration activity, particularly in the Porcupine Basin.

In the early 1980s there was an upswing in interest with new, improved seismic data. The problem with the Celtic Sea was that it was very difficult to image beneath the subsurface because of the nature of the geology: “We managed to convince a number of seismic contractors to shoot in the Celtic Sea and the Porcupine Basin” continues Shannon. By using larger airguns and longer streamers seismic imaging was enhanced, showing promising deeper structures. In addition to the new seismic data, a report on the Celtic Sea, produced by the PAD, identified titled fault block structures that had not been imaged before.

In 1981 PAD ran a licensing round that included the West of Ireland, Celtic Sea and Kish Bank basin acreage. That rejuvenated exploration, attracting new companies and leading to a new phase of drilling. Around this time also the Connemara oil and Spanish Point condensate discoveries were made in the Porcupine Basin, with the Helvick discovery proving the presence of high quality oil in the Celtic Sea.

“At this time there was no activity in the Rockall region as it was not seen as prospective” explains Shannon. “It was thought by many observers that the sediments were thin and the region was underlain by oceanic crust, which was of little interest.”

However, with new technology in the shape of ocean bottom seismometers deployed on the sea bed, wide-angle seismic data was acquired which showed that “the old story was wrong”.

“In fact we didn’t have oceanic crust but thinned continental crust. It changed the perception of the region and introduced the concept of hyperextended basins which have very different types of plays. It took many years to get this concept accepted and it turned out to be one of the most important pieces of work UCD undertook, in collaboration with research partners at the Dublin Institute for Advanced Studies (DIAS) and the University of Hamburg.

This helped rejuvenate the thinking in Rockall and also Porcupine. “The hyperextended basin model showed that the geology offshore Ireland is different from the North Sea, with different systems operating, different heat flows, different sedimentary architectures and therefore different types of traps.”

Research work was extended to Eastern Canada with a collaborative approach between UCD, University of Aberdeen, Manchester University and Memorial University in Canada. “We now know that the Irish basins (Porcupine and Rockall) are geologically very similar to the Jeanne d’Arc, Orphan and Flemish Pass basins. Back in the Jurassic and early Cretaceous periods the Irish basins were closer to Canada than to the North Sea. In recent years there have been some big discoveries in particular the Flemish Pass and we are looking at how we can export some of that learning to Ireland.”

Changes

The biggest change Shannon has seen is technology “in all its shapes and forms. Technology allows us to see things and that in turn allows us to develop new ideas,” he adds. He quotes the famous oil explorer Wallace Pratt, who said that oil is first found in the minds of explorers. “That means that you have to have a concept in your mind before you go looking for oil.” In order to build up concepts you have to be able to see into the subsurface and to think in four dimensions, length, breath, height and time, and technology has allowed us to do that”.

Shannon lists a number of technology developments that have revolutionised the industry. The first is seismic acquisition and data analysis. “The technology of seismic acquisition has improved beyond all recognition. This is partly because of the improvement in acquisition and processing technology but also because of the ability to handle huge amounts of data. This is perhaps the single biggest improvement: the quality of seismic images, particularly the advent of 3D seismic imaging.” With this technological advance comes the ability to model an oil field. “We can now model the flow of hydrocarbons through an oilfield and build models of reservoirs.”

The second technological advancement is in the area of drilling technology. “Drilling technology has improved enormously, particularly with the advent of deviated and horizontal wells that allow you to tap into areas you couldn’t previously. You can also follow individual thin reservoirs which would have previously required you to drill multiple vertical wells”.

Wireline logging technology has improved, “we can now extract a lot more information from wireline logs. Even the communications technology has improved. I remember in 1982 there was a huge advance, when instead of going out to a rig to watch the wireline logs they could be faxed to shore.

Many of the new plays we are looking at are stratigraphic. These are something we have been talking about for 25 years. Companies had until recently been reluctant to drill these because they were very subtle features. Nowadays you can image them much better and with recent discoveries, companies are becoming much more confident in drilling them. Technology has brought stratigraphic traps from theory to something you can now drill with some confidence.”

Production technology advances have also made a major impact. “When I started, a good field would recover maybe 35 per cent of the in-place reserves. Now it is 50, 60 and in some instances 70 per cent. That’s due to water injection, secondary recovery moving into tertiary recovery. Again, someone once said ‘the best place to find oil is an oilfield’. If you have a

500 million barrel field and previously you could recover 35 per cent and now you can recover 50 or 60 per cent that is equivalent to finding a really big oil field.”

Related technological advances are in the area of seismic stratigraphy which came out of work researchers at oil giant Exxon did after the first oil crisis. “It involves looking at the seismic data and interpreting the rock type. It is possible to look at a seismic profile and say that that looks like a reservoir, or that because of certain seismic attributes it is likely to be a cap rock. Sequence stratigraphy developed in light of the second oil crisis in 1979 and enables geologists to look at the concept of sea rises and falls in ancient times. If the sea level fell you get incisions in the shore line and sediments are brought further out into the basin. The consequence of sequence stratigraphy is that if you find a big channel in one area you can look at the direction sediments are moving and you can look 100 km out to sea and begin to think in terms of submarine fan sandstone reservoir systems. It is a sort of thinking innovation.”

Irish Offshore Operators’ Association

IOOA has been going for 20 years. It was previously an informal body called the Irish Offshore Operators’ Group. It is the representative body for the exploration and production industry in Ireland. The number of members has fluctuated depending on levels of activity in the sector. It currently has 15 members ranging from the big global players like Shell and Statoil to mid-size companies like Kinsale Energy and new entrants Woodside, Kosmos and Cairn, to smaller Irish companies such as Providence Resources and Lansdowne Oil & Gas.

To be a member of the IOOA a company needs to hold 10 per cent of an option, license or lease.

IOOA also provides a forum for discussion for various stakeholders including government agencies and other interested parties. “We try to provide a coordinated consensus view on safety and environmental issues and on licensing terms. This is done largely through our expert sub-committees”.

“We have a significant amount of experience and have tried to be proactive in sharing our expertise.” IOOA has run technical workshops on subjects such as cold water corals. “We try to provide information relevant to the Irish offshore oil and gas industry. This includes getting across the message that the oil and gas industry, which often gets a bad press, has contributed very significantly to the Irish economy – to the tune of €1 billion to Irish contractors on the Corrib project or to the €30 million each year Kinsale Energy contributes to the Cork economy”.

Future outlook

At present Ireland is heavily reliant on imported oil and gas. There is now an awareness of climate change – an extraordinarily complex issue but there is no doubt that burning fossil fuels contributes to it. “Oil, and particularly gas, are cleaner fuels than coal – switching from coal to gas halves the [CO2] emissions”.

“For the foreseeable future oil and gas will remain part of the energy mix because there is simply no alternative at present. We also have a security of supply issue. If there was an interruption – and there have been some interruptions during my life time – in order to secure Ireland’s energy supply it is incumbent on the State to at least find out what natural energy resources we have offshore. I think it is important that the forthcoming White Paper states clearly the vision for exploring for oil and gas in Ireland in order to secure our energy future”.

“Most of our offshore has not been explored. I think there is a significant future for the Irish offshore industry, both in the Atlantic basins but also in the shallower basins in the Celtic Sea. Exploration companies need to be encouraged to come into Ireland”.

In addition to the Kinsale Head region gasfields, there have also been several discoveries in the Celtic Sea such as Barryroe. There is also the Corrib gasfield and other discoveries in the Atlantic Margin basins. I think there is potentially a great future for the Irish offshore but in order to realise that potential we need to get wells drilled. That’s an expensive business. ExxonMobil’s Dunquin well drilled a couple of years ago cost $200 million. That was funded entirely by the consortium as is the case for all oil and gas exploration in Ireland and industry needs to get a fair return for such investment. Therefore the terms need to be favourable.

We have had very few wells over the last few years and we need to get a good cohort of companies exploring. Things were looking reasonable until the oil price crash. There are a number of really good companies here that think in an innovative manner and they need to be encouraged to stay. We need to do a number of things: our licensing terms need to be competitive. Our regulatory and planning framework needs to be improved. It is very complex at present and it has got to be made easier for companies to come and spend their money in Ireland rather than elsewhere. For an exploration well drilled in the Porcupine or Slyne basins the net benefit to the Irish economy is typically approximately €3 million”.

“Looking to the future, we have a significant potential provided we can get the right sort of terms and the right framework. It is a little bit like opening a new supermarket – you have to be very attractive at first. If there are significant discoveries then it changes the scene and for future rounds fiscal terms less attractive because the exploration risks are less – but you have got to get people exploring first”.

Profile: Pat Shannon

A native of New Ross, County Wexford Pat Shannon is a geology graduate of University College Dublin, where he studied science, “drifted into geology and became fascinated by it.” A PhD followed starting in UCD and moving to Newcastle Upon Tyne. Pat then moved back to Ireland working for the Geological Survey. In 1979 he joined the government’s Petroleum Affairs Division, becoming Principal Geologist. 1983 he took the opportunity to return to UCD to continue his research interests. He joined UCD as a lecturer and retired as Professor of Geology. He was also Associate Dean of the Faculty of Science and a member of the UCD Governing Authority, and is still a member of the Senate of the National University of Ireland. He is a Member of the Royal Irish Academy and was the first academic to chair the Institute of Petroleum’s Irish Branch (now the Energy Institute). He is the current chair of the Irish Offshore Operators’ Association.

Pat’s interests are “generally outdoors” and include fishing and cycling. He has a long involvement in managing soccer teams and is still involved with his local club Dundrum F.C. He is also interested in genealogy “which charts the history of social change over the years.”