The Providence operation, drilling for oil and gas in the Atlantic ocean off the coast of Ireland

IRELAND'S hopes of becoming a centre for oil and gas exploration received a hammer blow yesterday after drilling for a potentially huge oil or gas field in the Atlantic apparently failed and the world's biggest company said it would not drill around Ireland again.

Exxon, which had been drilling an exploration well at the Dunquin North licence off the west coast of the country, said it did not recover any "commercially viable hydrocarbons" from the well.

It will therefore be plugged, and Exxon does not plan to drill again around Ireland "for the foreseeable future".

The decision to effectively quit Ireland is a huge blow to hopes that explorers may want to drill in Irish waters and potentially create a windfall for the Exchequer.

Hydrocarbons

Dunquin, which is in the Porcupine Basin about 150km off Kerry, had long been seen as the prize asset for Irish oil and gas with potentially huge reserves of hydrocarbons.

When Exxon began drilling on the licence in April it was one of the most anticipated moves in Irish exploration history. However, Exxon said yesterday that while some residual oil had been found in the well, it was not in large enough quantities to warrant continuing drilling.

"It is disappointing that the Dunquin prospect has proved to be water bearing, with no commercially recoverable hydrocarbons," said ExxonMobil's European exploration director Kevin Biddle.

"This project had a higher level of risk and a higher reward, which unfortunately was unsuccessful. This result underlines the uncertain nature of deepwater exploration," he added.

Exxon had a 25.5pc share in the well, while Eni and Respol hold 27.5pc and 25pc respectively.

Industry sources, however, suggested the full data from the well was much more positive than negative, and there was said to be some frustration within the consortium over the level of information on Dunquin that was released publicly.

Dublin's Providence Resources holds 16pc in the site, and that company's shares were hammered yesterday, falling as much as 10pc before recovering somewhat.

In a statement, Providence boss Tony O'Reilly Jr said the well "had demonstrated that all of the key components of a working petroleum system exist in the southern Porcupine Basin.

"These data are encouraging not just for the adjacent Dunquin South prospect, but also for the basin in general", he added.

Dunquin South is operated by Exxon, and Providence has a 16pc stake in the licence. Despite the apparent failure, analysts were still positive about the drilling results.

Davy Stockbrokers, who is a house broker to Providence, said the results would de-risk the Dunquin south project.

"Evidence of a possible residual oil column in good quality carbonate reservoir indicates that all the elements of working petroleum system are present in the basin. In particular, the presence of oil in the south Porcupine significantly de-risks the basin," said Davy's Job Langbroek.

"This bodes well for Providence's other prospects/targets in the region," he added.

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