OIL production "should" begin this year in the Connemara Field the Minister for State at the Department of Transport, Energy and Communications, Mr Emmet Stagg said yesterday.
Mr Stagg was speaking at the announcement of 11 licences to 16 companies for 58 full and part blocks in the Rockall trough.
He said offshore exploration activity was set to increase by more than 50 per cent following the granting of the new licences.
Mr Stagg announced that the South Porcupine would be the subject of a frontier licensing round with a closing date for the round of December 15th, 1998. A further announcement would be made later this year in regard to terms, duration and phases of the licences.
There were 23 licences in existence prior to yesterday's announcement and Mr Stagg said the Rockall licences would involve greater activity than the licences already in existence.
Overall, he said, $1 billion (£660 million) had been spent in offshore exploration to date and this showed serious interest on the part of the exploration companies.
A number of wells will be drilled this year in areas other than Rockall. Total and Marathon will drill wells in the Porcupine Basin, off the west coast, and Enterprise will drill in the Kish Bank Basin off Dublin. Two appraisal wells will be drilled by Statoil in the Porcupine Basin. A similar level of activity is expected next year.
"This year, I expect, will be a milestone in oil and gas exploration offshore Ireland, when we should have, after decades of effort, oil production in Ireland for the first time," Mr Stagg said.
"In April of this year Statoil began an appraisal programme for the Connemara Field. All being well, they should shortly start to produce oil under an extended well test and if they declare commerciality, they plan to go into full commercial production next year." Mr Stagg said.
In the Rockall trough, one group has committed to drill during phase one and another two would make provision in their first phase budgets to drill should they identify drillable prospects. These groups were not named.
The licences are for 16 years, divided up into four phases of four years each. Under the terms of the licences, each group is required to do a certain amount of work. Up to 18,000 kilometres of new 2D seismic and up to 2,000 square kilometres of 3D seismic data would be acquired and assessed, which Mr Stagg said should provide a clearer picture of prospects by the end of the first phase.
As part of the licence deal, the industry is to set up a Rockall studies group, which it would provide with a budget of almost £5 million. The group would undertake regional data acquisition and research projects within the Rockall trough area.
The department's petroleum affairs division is to manage an offshore support group which would be provided with £800,000 in funding made up of equal contributions from participating companies. This group would examine overall support structures for the offshore in general.
Mr Stagg said the decision on who got licences was made according to commercial criteria. Political issues, such as the activities of companies in other countries, were not a factor. Shell and Total, two of the recipients of licences, have been criticised for their activities in, respectively, Nigeria and Burma.
There were two companies which applied for licences but were not successful. They were not named. They were unsuccessful because other companies had better bids for the locations concerned. Several blocks were the subject of competing bids, four in one case.
