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Minister of State Seán Kyne TD speech at 2016 Atlantic Ireland Conference

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Tuesday, 1 November 2016, Double Tree by Hilton Hotel Burlington Road


Ladies and gentlemen it is my pleasure to open this, the eighth annual Atlantic Ireland Conference and Exhibition.


The Conference continues to be the premier event in the Irish oil and gas sector's calendar, providing an invaluable forum for industry, government organisations, the research community, non-governmental organisations, contractors, consultants, students, and indeed interested citizens, to come together and discuss the latest exploration opportunities and research results.


The Conference involves a broad range of presentations, including updates from Government, technical presentations, updates on research initiatives and presentations on prospects. In addition there is an exhibition area.


The success of previous conferences has seen this year's conference move from a one day to a two day event. It is very positive to see so many here this morning. I understand from the organisers that this year's conference registration has exceeded 450.


In welcoming all participants I would like to extend a special welcome to those of you who have travelled from overseas. I hope that your stay in Ireland is both fruitful and enjoyable.


This morning I propose to share with you my thoughts on three key issues:

  • Government strategy and policies in respect of oil and gas exploration and development;
  • developments since Atlantic Ireland 2015; and
  • research initiatives.


Government policy
The Government's underlying strategic objective is that the State's offshore oil and gas resources should be explored and developed in a manner that will maximise the benefits accruing to the people of Ireland. The Government continues to strive with industry to realise that objective.

Since exploration began in the Irish offshore, four commercial gas discoveries have been made: Kinsale Head, Ballycotton, Seven Heads and Corrib. There have been no commercial discoveries of oil to date.

Early exploration efforts viewed the petroleum geology of the Irish offshore as being comparable to that of the North Sea. However, lack of success from drilling efforts in the 1970s and 1980s led to a decline in interest. However industry perspectives as to the potential of the Irish offshore have been transformed in recent years. While the North Sea comparison retains potential, new possibilities have emerged.  

Successful exploration off the Atlantic coasts of Africa, South America and Canada has stimulated new interest in the potential of the Irish Atlantic Margin, with new data, analysis and targets. Exploration interest has been drawn to the potential for Ireland to replicate the oil and gas success of Newfoundland-Labrador.

Exploration in the Irish offshore is heavily capital intensive, particularly in the Atlantic Margin with its deep waters, distance from shore and adverse weather conditions. Ireland faces competition for exploration investment from established and proven oil and gas provinces and from emerging provinces with similar exploration profiles. Typically, each year, over 20 countries will offer licensing opportunities in their offshore waters.

Government efforts in this area have focussed on three clear actions.

The first - to deepen knowledge of Ireland's oil and gas potential, in particular through data acquisition and supporting key research projects.

The second - to make sure that the regulatory regime is fit for purpose.

The third - to offer attractive and innovative licensing opportunities and to then promote the opportunity.

In that context that Government has:

·        Initiated and supported data acquisition projects such as the 2D Atlantic Margin Regional Seismic Survey Project; and is actively supporting research projects such as iCRAG, PIP-ISPSG, ObSERVE and NAPSA the North Atlantic Petroleum Systems Assessment Group;

·        Reworked and modernised Ireland's regulatory and fiscal frameworks, in particular the revised fiscal terms included the Finance Act 2015 and the Petroleum Exploration and Extraction Safety Acts 2010 and 2015.

·        Provided cost-effective entry licensing mechanisms such as the Licensing Options offered under the 2011 and 2015 Atlantic Margin Licensing Rounds;

·        Actively promoted Ireland as an exploration investment destination, particularly in Europe and North America.

Developments since 2015
There have been a number of significant developments since 2015's Conference. We have seen:

·    a new Partnership Government;

·    the Corrib field coming into production;

·    the publication of the Energy White Paper;

·    the outcome of the 2015 Atlantic Margin Licensing Round;

·    and of course BRexit.

A key milestone was achieved on 31 December 2015 with the coming into production of the Corrib gas field. Production from the field represents an important addition to Ireland's energy security with the field projected to meet on average 42% of all-island gas demand over its first two years of operation.  From an economic point of view the Corrib project has significantly created over 1,000 jobs during development and will add up to 0.6% to GDP.

Energy White Paper
The Energy White Paper published at the end of 2015 sets out a roadmap for Ireland's energy sector to 2030. It focuses on how Ireland can ensure secure supplies of competitive affordable energy to our citizens and businesses taking into account European and International climate change objectives.

The White Paper forecasts that, in a low-carbon energy future, between a quarter and half of Ireland's energy needs will continue to be met by fossil fuels. So, even as we transition to a low carbon energy system, secure supplies of gas and oil will continue to be a key need for our economy. 

In the short to medium-term, the mix of non-renewables will shift away from more carbon-intensive fuels, like peat and coal, to lower-carbon fuels like natural gas. In the longer-term, the intention is to largely replace fossil fuels with renewable energy sources.

In that transition period the development of Ireland's offshore oil and gas resources has the potential to deliver very significant and sustained benefits to the people of Ireland in terms of national and local economic development, technology learning, enhanced security of supply, import substitution and fiscal return.

Export opportunity
To take a global perspective - the International Energy Agency has forecast that oil and natural gas will still remain significant elements of the world's energy supply out to 2035.


The world depends on a relatively small number of petroleum provinces, many located in areas of political instability, for its oil and gas supplies. 

Even with demand destruction efforts, technological learning, and the developments in shale gas and tight oil output in North America, gradual depletion of the most accessible conventional oil and gas reserves requires the finding and development of new fields. 

To meet forecast demand the IEA has estimated that expenditure of 900 billion US dollars a year on upstream oil and gas exploration and development will be required by the 2030's. The opportunity exists to position the Irish Offshore to attract a greater share of this investment.

2015 Atlantic Margin Licensing Round
Turning to the outcome of the 2015 Atlantic Margin Licensing Round. At its close in September 2015, 43 applications for licensing options were received from 17 companies. This was by far the largest number of applications received in any licensing round held in the Irish offshore, almost triple the number of applications received under the 2011 Atlantic Margin Licensing Round. The applicant companies included majors, mid-cap companies and smaller companies. To be honest, while we knew that there was a strong industry interest in the round, the response far exceeded expectations.

Given the large number and complexity of overlapping competing bids, and in order to respond to industry needs, evaluation of applications was split into two phases. The first phase focused on an area in the southern Porcupine Basin, where a number of applications included commitments to acquire new seismic surveys in 2016.

The second phase involved consideration of the remaining areas applied for. By June of this year 28 new Licensing Options had been awarded to 17 companies. Already we have seen companies actively pursue work programme commitments on the new Licensing Options with a significant level of 3D data acquistion already undertaken in 2016.

The outcome of the Round is a further positive signal of the building momentum in oil and gas exploration offshore Ireland. Clare and Ciarán will tell you more about the Licensing Round in their presentations.

Offshore Safety Directive Developments
In 2013 the European Union introduced the Offshore Safety Directive, which provides for the regulation of upstream petroleum safety, with particular regard to major environmental hazard. This was the first legislative intervention by the EU that was specifically directed at the oil and gas exploration sector. 

The Petroleum (Exploration and Extraction) Safety Act 2015 enacted in July 2015 transposed this Directive - integrating the Directive requirements with the safety regulatory system for oil and gas exploration and production activities in Ireland introduced under the 2010 PEES Act and building on the Petroleum Safety Framework being operated successfully by the Commission for Energy Regulation since December of 2013.

The Directive, as transposed requires all Member States to give effect to the principle that exploration companies should have unlimited financial liability where damage arises from their activities. The approach adopted will be of critical relevance to the ability of small and medium sized exploration companies to operate.  My Department is progressing the development of appropriate structures for the introduction of a financial liability regime for Ireland.  I welcome the analysis recently undertaken by the Irish Offshore Operators Association, which has been shared with the Department, and which will be considered in finalising the framework to be established here in Ireland. My Department will continue to engage closely with industry and at EU level on this issue, and I will ensure that there is appropriate consultation with all relevant stakeholders before such structures are finalised. 

As you will be aware BRexit poses significant challenges for Ireland. However we will be ready to meet this challenge. Our preparations have been ongoing for over a year now.  

Our planning ahead of the negotiations – both for the risks and opportunities for Ireland – has intensified at both political and official level. This work is still challenging as it's still not known what kind of relationship the UK will have with the EU. These negotiations are going to complex and multilayered.  

To ensure an effective whole-of-Government response to the challenges ahead, we have developed specific structures for Brexit including:

·    the new Cabinet Committee dedicated to Brexit, chaired by the Taoiseach, that oversees the overall Government response;

·    A new Second Secretary General in the Department of the Taoiseach leading a new integrated division, which includes Brexit matters;

·    A bigger role for the Minister and Department of Foreign Affairs and Trade on EU matters;

·    Examination by Departments of all possible models for a future UK relationship with the EU, from single market membership to full exit of the customs union;

·    senior officials between the UK and Ireland have met to discuss specific areas of mutual interest;

·    establishment of a consultative group of external stakeholders; and

·    an all-island conversation about Brexit and its impact.

In that context I would like to acknowledge and welcome the work undertaken by the Irish Offshore Operators Association in assessing the impact BRexit will have on the Irish Oil and Gas industry. It is invaluable for Government planning to have that sectoral perspective.

Research Initiatives
Research undoubtedly plays a pivotal role in revealing the hydrocarbon potential of our Offshore, and in ensuring that we protect our rich marine environment.

In 2014 Science Foundation Ireland approved €26 million in funding for the Irish Centre for Research in Applied Geosciences or iCRAG programme. Funding provided by industry through the Petroleum Infrastructure Programme played an important part in the funding bid. Another critical factor was the willingness of industry and Government to commit a significant level of specialist expertise, experience and indeed data to the iCRAG programme.  The first over-arching objective of iCRAG aims at significantly de-risking Ireland's offshore hydrocarbon exploration.

I know that it has been a busy year for iCRAG and that you will hear more this afternoon on progress.

Ireland's marine ecosystems are home to a rich and diverse range of species and habitats. The protection of our marine ecosystems and compliance with national and international environmental legislation are essential components of our sustainable future, and a key imperative if we are to build on the successes of recent Licensing Rounds. 

In addition to carrying out Irish Offshore Strategic Environmental Assessment 5 in advance of awards under the 2015 Round, my Department in partnership with the National Parks and Wildlife Service of the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs initiated the innovative ObSERVE Programme. 

The on-going discovery, development and use of major hydrocarbon resources that occur in Ireland's seas have the potential to be very significant economic drivers for Ireland as well as delivering energy security.  These seas are home to a diverse array of species such as whales, dolphins, porpoises and seabirds many of which are protected under national and international legislation and agreements. 

Major marine industrial activities such as seismic exploration and the development and exploitation of hydrocarbon resources in Ireland's geological basins require careful management and regulation to ensure consistency with Ireland's environmental obligations.  There remains a requirement for improved knowledge with respect to protected species in Irish Waters to inform and underpin appropriate management and regulatory actions while also facilitating significant industrial practices wherever possible.

The ObSERVE programme which commenced in 2015 and will continue through to 2018, is a significant acoustic and aerial data acquisition programme designed to acquire new environmental baseline data, with the aim of filling existing protected marine mammal and bird data gaps in key offshore basins. This is the first time in the EU, to the best of our knowledge, that an authority responsible for oil and gas exploration and the authority responsible for nature conservation have teamed up to find answers to these complex questions.  This collaborative approach has resulted in pioneering work that is very important to both regulators and industry and its findings will provide a sound basis for sustainable growth and investment in the coming years. 

Presentations on both IOSEA5 and the ObSERVE Programme will form part of tomorrow morning's session on Environment.

Petroleum Infrastructure Programme
Ireland is well served in having since 1997 its own dedicated petroleum research vehicle, the Petroleum Infrastructure Programme or PIP.

Through the PIP, which is funded by way of contributions from the holders of Frontier Exploration Licences, industry, my Department and academic researchers work closely to implement research projects capable of supporting efforts to promote exploration. Such projects focus on: 

•     Regional geological and geophysical data gathering and studies aimed at improving knowledge of petroleum systems and exploration potential;

•     Special engineering studies to improve exploration & production cost effectiveness; and

•     Environmental studies.

Over almost two decades this colloborative Programme has played a critical role in developing our understanding of the potential of the Irish Offshore and I would like to pay tribute this morning to the efforts of all involved.


I am very conscious that these are very challenging times for the oil industry. Whilst low oil prices have benefitted economies generally, sustained low prices have significantly impacted on exploration and development investment leading to retrenchment by industry.

At such a challenging time, it is very positive for Ireland that the industry has given a "vote of Confidence" to the Irish offshore in its response to the 2015 Atlantic Licensing Round. The number and quality of exploration companies involved is a welcome development. 

The new entrants and indeed re-entrants will, I believe, bring a new perspective and new interpretation of our hydrocarbon potential. The current upturn in interest will hopefully result in an increase in the number of wells drilled; and ultimately in the realisation of producing fields.

The Government continues to be committed to acting innovatively and complementing the work being undertaken by industry and the research community.

I wish you well with today's and tomorrow's conference proceedings and to the exciting times ahead.





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