The West of Ireland and North America’s eastern seaboard have been closely linked ever since the early sixteenth century’s migrations into the ‘New World’.
Indeed, today, citizens with Irish heritage account for 15% of all of Canada’s population - that makes Irish Canadian the country’s fourth largest ‘ethnic group’ - and, it still remains a popular emigration route for the Republic’s young adults.
$1.3bn of new investment set for Canadian exploration
Geologically, however, the ties between each side of the Atlantic actually go back millions rather than hundreds of years. And that has genuine significance for Irish oil explorers like Europa Oil & Gas PLC (LON:EOG) and Providence Resources PLC (LON:PVR).
Today, it was revealed that large multinational firms including BHP Billiton PLC (LON:BLT) and the Norwegian company Equinor, formerly known as Statoil had committed to some US$1.3bn of oil and gas spending off the coast of eastern Canada.
“This success confirms us as a global centre of interest for the world’s oil and gas exploration companies,” said Siobhan Coady, Minister of Natural Resources in the Newfoundland and Labrador government.
That, according to Europa Oil & Gas, should also provide encouragement for those investing in Ireland’s nascent Atlantic oil future.
$1.3 billion work programmes offered for 4 licences in Eastern Newfoundland on the opposite side of conjugate margin to Europa's licences in Atlantic Ireland. This is what exploration success looks like and what might come to Ireland. https://t.co/If6qxVNhZj— Europa Oil and Gas (@Europaoilandgas) November 8, 2018
Conjugate potential explained
The uninitiated ought to strap themselves in, as this is likely to get a little technical, but, hopefully not too much!
Ireland’s west coast Atlantic margin and Canada’s eastern Atlantic margin – specifically Newfoundland - are what’s known as ‘conjugates’.
In simpler terms, they could be said to be paired or even twinned.
Keeping things top-level and simple: If you look far back enough on a long enough geological timeline, the two spots now separated by an ocean were once together, one and the same.
And, that fact potentially becomes very significant for those now seeking oil resources potentially locked beneath the surface offshore Ireland.
It is why proponents of Ireland’s exploration potential are likely to take the first opportunity to point out the discoveries in the ‘Flemish Pass’, offshore Newfoundland where Equinor (then called Statoil) unearthed the currently undeveloped, 300mln barrel Bay Du Nord field.
It is for a similar reason that discoveries in West Africa are given relevance to those now being found off the South American coast, in places like Guyana.
Bay du Nord was greenlighted with an agreement between Equinor and the Newfoundland and Labrador authorities in July this year.
The project will be a near $11bn development (with the start-up closer to $7bn) and is expected to be online in 2025. In all, it could span between 10 and 30 wells, with a floating production facility capable of handling 94,000 to 188,000 barrels of oil per day.
Anything remotely similar would have the potential to dramatically transform Ireland’s economy, which presently relies entirely on imported petroleum and has a substantial portion of households dependent on kerosene heating oil.
So successes in Canada helps Irish exploration?
In lay terms, the exploration concept is that the geological signatures seen successfully in one location provides a ‘proof’ or reduces the risks for similar or equivalent untested prospects in the other.
Indeed, successes in Newfoundland were cited as an important factor when in 2015, several large multinational oil companies snapped up swathes of Irish acreage when the Dublin government completed its offshore licensing.
Arguably, it is telling that the 2015 process was Ireland’s ‘most successful’ offshore licensing, despite a backdrop of the worst oil prices for a decade and - almost everywhere else - an industry-wide abandonment of exploration and growth projects.
State-backed Chinese oil interests, multi-national ‘super-majors’ like BP PLC (LON:BP.) and Exxon Mobil Corp (NYSE:XOM), and independent exploration and production specialists like Equinor were among those taking up Irish acreage in the 2015 licensing round.
Several of those exploration projects are now advancing, with some wells now expected to be drilled in 2019.
It is with those new exploration efforts in mind, that Europa O&G highlighted today’s new Canadian commitments being made by the likes of BHP and Equinor.
Europa plans partnerships and exploration drilling
Actual oil will need to be actually discovered in Irish waters first, but, according to Europa, substantial investors also could be drawn to Ireland if similar exploration successes are achieved.
As Europa is presently seeking a funding partner for its exploration projects, its motivation for highlighting the new investment is probably quite clear.
Europa has so far identified a catalogue of exploration targets in Ireland’s Atlantic, with an aggregate of 4.3bn barrels of oil potential presently estimated.
A process is underway to ‘farm-out’ project equity stakes to new partners in return for drilling funds, and, the small-cap exploration company hopes to start drilling in either 2019 or 2020.
Evidently, Europa would be a key beneficiary if positive industry interests translate across the Atlantic.