Projects in Ireland

Island has used its local country knowledge, operating capability and technical expertise to grow organically an attractive package of licences and option agreements in offshore Ireland in the Celtic Sea and Atlantic Margin at a low entry cost. The project portfolio includes interests in nine Irish offshore licences (seven as operator), including one producing field (the Seven Heads gas field) and four potential oil and gas development projects. Island also has access to the Marathon infrastructure at Kinsale via Seven Heads and is party to a Gas Sales Agreement at Seven Heads.

Island has a proven ability and track record as an operator, having operated four successful gas wells during 2006 and 2007 in the harsh geological environment represented by the Celtic Sea. Three of these wells successfully flowed gas: 48/23-3 in West Seven Heads (13.2 mm cfpd); 49/23-2z in Old Head (19 mm cfpd); and 57/2-3 in Schull (21 mm cfpd). Island drilled the first successfully tested exploration well in the Celtic Sea for 16 years and is the only operator in offshore Ireland (including the Atlantic Margin) to have announced three successfully tested exploration and appraisal wells in the last decade. Island successfully demonstrated that for the relatively low cost of applying new technology to reprocessing existing seismic data, combined with local basin experience, new gas finds could be made in the Celtic Sea.

The string of drilling successes Island has achieved in the Celtic Sea will, once developed, extend the life of the Seven Heads and Kinsale facilities, thereby making a significant contribution to the Security of Supply issue by helping to accelerate the development of indigenous gas and providing additional options for gas storage based on the availability of accessible indigenous cushion gas in its Old Head and Schull fields.

Island is encouraged by the level of interest it is receiving from the industry in its farmout portfolio of Atlantic Margin prospects and assets, including the undeveloped Connemara oil field. This is partly due to the fact that Island can demonstrate a highly successful track record as a prudent operator in Ireland based on its organically grown licensing opportunities and prospect generation. The same successful Celtic Sea business model is being applied to our Atlantic Margin portfolio, albeit over a longer timescale due to the high cost of drilling in the deeper water environment of the Atlantic Margin. For the Atlantic Margin portfolio, Island is now seeking a broader corporate transaction from a strategic partner that reflects the potential for its two giant, medium risk, gas prospects in its Rockall Licence (the Killala and Kingfisher Prospects). This would have a significant impact on the Irish gas market if successfully drilled and proven to be gas bearing. These prospects are located less than 35 kilometres from the proposed Corrib offshore pipeline. Island’s business model in this part of the Atlantic Margin therefore mirrors its Celtic Sea infrastructure play.

Elsewhere on the Atlantic Margin, Island is focused on oil (in the South Porcupine, Connemara and Slyne assets and prospects). We have a  strategic partnership with Supernova Ireland Resources BV, a subsidiary of the Bluewater Group, one of the world’s largest providers of floating production vessels. This will provide Island with a window to new technologies necessary to assist with the offshore development of any significant oil discovery made in its Atlantic Margin portfolio and will also provide us with access to new potential partners through the established Bluewater business relationships. Supernova is also a strategic shareholder in Island.

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