Oil companies working to develop what has been described as one of Europe's largest undeveloped offshore oil fields – the Barryroe field in Ireland - have suffered a setback after an Irish minister refused to grant them a permit to proceed with Barryroe works citing the issues with financial capability of the partners involved.
Barryroe Offshore Energy, the operator of the license containing the promising Barryroe oil and gas field, said Saturday that it on May 19, 2023 received a letter from the Department of the Environment, Climate and Communications ("DECC") in relation to the Lease Undertaking Application.
„The correspondence confirms that Eamon Ryan, Minister for the Environment, Climate and Communications ("the Minister"), not being satisfied with the financial capability of the Applicants, having been assessed in accordance with the provisions of the Act of 1960, the 2007 Licensing Terms and the Financial Capability Assessment Guidance, cannot grant the Lease Undertaking as sought,“ Barryroe Offshore Energy, previously known as Providence Resources, said.
The company said that the assessment had concluded that from a technical perspective the Barryroe Lease Undertaking application was satisfactory for the purpose of Section 3 of the 2007 Licensing Terms and that the technical capability of the applicants was satisfactory for the purpose of Section 9(A) of the Act of 1960.
However, according to Barryroe, the letter states that the applicants do not meet the Investment Cover criterion as required by the Financial Capability Assessment Guidance.
Consequently, the SEL1/11 licensees have no rights over the acreage held under SEL1/11 as SEL1/11 expired on July 13, 2021.
„The Company is considering its response to the contents of the letter,“ Barryroe said.
In the meantime, Barryroe Offshore Energy's partner in the offshore license Lansdowne Oil & Gas has already said it is considering legal action against the Irish Government.
„[Lansdowne Oil & Gas ] can advise shareholders that in recent weeks, given the considerable investment made to date by Lansdowne in the Barryroe project, the substantial potential value that the project could realize for Ireland and all stakeholders involved and the apparent lack of any progress nor any engagement by the regulatory authority, Lansdowne has been engaging with external legal counsel to assess its legal rights and the potential options available, including pursuing legal proceedings, for the purposes of protecting its investment in the Barryroe project,“ the company said.
„The decision with respect to the Lease Undertaking is disappointing not only for the Company, but also other stakeholders, including Ireland, which continues to import significant amounts of oil & gas, something the development of Barryroe could help to address,“ Lansdowne said.
"Accordingly, the company has no choice but to now formalize the engagement with external legal counsel and pursue legal proceedings for the purpose of protecting its investment in the Barryroe Project.
"These discussions are already well advanced, as noted above, and the Company believes there is clear evidence of the DECC and the Minister failing to act in a fair and equitable manner with the Barryroe Partners consistent with its obligations under Irish law and also international law. Given Lansdowne is a UK domiciled company it expects to pursue its claim in international arbitration pursuant to the investment protection regime established under the Energy Charter Treaty to which both Ireland and the United Kingdom are signatories.
"A further update will be made with respect to the appointment of legal advisors as appropriate, along with more information on the claims sought by Lansdowne in this matter," Lansdowne said.
According to Lansdowne Oil & Gas, Barryroe contains significant quantities of oil and gas with the potential to deliver much needed energy security for Ireland and great value for all stakeholders.
Lansdowne says it has invested c. $20 million in the Barryroe project to date and the results of the Competent Person Report carried out by RPS ("RPS CPR") announced in February 2022, addressing simply the first phase of a Barryroe development and solely the Basal Wealden Oil reservoir, concluded that the P50 volumes were estimated at 81.2 million barrels of oil recoverable gross (16.24 million barrels net to Lansdowne) from a Best Estimate of 278 million barrels of oil in place (STOIIP).
"An economic evaluation, documented in the RPS CPR, covering the proposed Phase 1 development (Phase 1A and 1B) and in the 2C oil resources case, delivers an NPV10% for Lansdowne's 20% share of $104 million under a Brent Oil Price assumption of US$68 per barrel in 2027, rising to $70/bbl in 2028 and 2029 and inflated at 2% per annum thereafter," the company said.
The company reiterated that the RPS CPR had only addressed the oil in the Basal Wealden A Sand, which allows it to be correlated to the earlier work carried out by Netherland Sewell and Associates Incorporated ("NSAI").
Gas was proven in the Basal Wealden C Sand reservoir in the 48/24-10z well that overlays the oil reservoir and this has previously been estimated to hold a potential gas resource of c 400 BCF GIIP.
"Lansdowne believes this significant gas resource could make a vitally important contribution to Ireland's energy mix as it transitions to a zero net carbon economy and it is anticipated that any future phased development program will include consideration of this important gas resource," Lansdowne said.
Steve Boldy, CEO of Lansdowne Oil & Gas, said: "It is with great reluctance that we must now resort to legal proceedings in relation to our investment as we would much rather have moved forward with a Lease Undertaking and appraisal drilling, for which funds had been sourced, to advance Barryroe toward development for the benefit of all stakeholders.
We believe we have a very strong claim against the Irish government and the company will be resolute in defending and protecting the rights and investment of our shareholders."