This week saw the announcement of a new oil find off the south coast of Ireland, not far from my home town of Cork. There has been speculation of oil in various pockets off the coast of Ireland for many decades, so this is hardly a massive surprise. This find, in the Barryroe field, is not far from the existing Kinsale Head gasfield and there are several other potential gas fields in the same region. The only real surprise is that most experts in Ireland have long assumed that if any viable oil deposits were brought to market from Irish waters, they would be the oil under the Porcupine bank.
Indeed previous drilling in the Barryroe field in the past has yielded hints of possible viable oil deposits before. However, recent drilling activity has upgraded the estimated recoverable oil to some 280 million barrels of oil, or about 20,000 bbl/day of production .What these finds off the Cork coast do serve to illustrate is that there is indeed still plenty of oil left in the world. But the vast bulk of the world’s oil (and fossil fuel reserves) is contained within lots of little small pockets, often in more remote and inaccessible locations (such as under deep water in the Arctic).
However, before my fellow Corkonians start ordering Ferrari’s and cancelling the wind farm orders I would have to point out that current Irish oil consumption stands at around 9 mtoe (million tons of oil equivalent) per year or about 182,000 bb/day. Thus the Barryroe field can meet barely 12% of Irish domestic oil consumption. Even if we could somehow raise production to an arbitrary rate of our choosing (which we can’t! certainly not for a deep water field!), the field would only supply Irish oil demand for about 4 years, and global demand (of about 85 million bbl/day) for about 3 days. So it is, literally a drop in the ocean.
Granted great news for shareholders of these companies, but not much else. As I’ve previously pointed out, the media have a habit of overreacting to these sorts of announcements, largely because many of whom don’t understand that 280 million barrels is actually small potatoes in a global oil market (or indeed in terms of the Irish domestic market) and can get a bit carried away.What finds like this illustrate is that we are into the next phase of the age of oil. While rumours of the oil industry’s death have been greatly exaggerated. The very fact that the oil industry is going after small beer such as Barryroe, indicates that the days of the mega oil fields are well and truly over .
Also, smaller fields like this in deep water (which international oil companies would previously have turned their nose up at) are only cost effective to tap at times of high oil prices….but! high oil prices depress demand. Already the relatively timid rise in oil price over the last year or so has seen retail sales of petrol in the UK fall by 15%.
So this next phase of the age of oil is going to be a case of slow gradual declines. Oil will still be available to anyone able to afford it (unless measures to conserve it or ration supply are implemented), but in ever decreasing quantities and at an ever higher price. The risks involved in acquiring it will steadily grow, as will the environmental costs associated with it. All the more reason (as if climate change wasn’t a good enough reason!) to want to move beyond oil .