Oct. 16 (Bloomberg) -- In an Irish village known more for its riches than resources, locals used to celebrity spotting are steeling themselves for a fight over oil.
Providence Resources Plc and its partner won a license on Sept. 27 to carry out exploratory drilling in Dublin Bay, 7 kilometers (4.3 miles) east of Dalkey, where U2 frontman Bono and fellow musician Van Morrison have homes. The plans are pitting villagers who welcome the potential investment against others frightened of the impact on the landscape.
“If there was an oil spill, it would be a disaster for the people living here,” said John O’Sullivan, 66, a writer, out for a walk on the beach facing the proposed location of the rig. “They’ll never get permission to drill commercially; the well-heeled locals here will see to that.”
While no viable oilfield has ever been found in Irish waters, local lawmakers and conservation groups are preparing for battle against Providence, which says the coast has the potential to be the new North Sea. Oil and gas production there contributed more than $480 billion to British tax revenue over the past 40 years, according to Oil & Gas U.K.
For Ireland, one of five euro countries to ask for an international bailout, tapping national resources may be a way to help it out of its worst recession in modern history, Providence Chief Executive Officer Tony O’Reilly said.
“There is a lot of scaremongering going on which isn’t based on the hard facts,” he said in an Oct. 10 interview. “The government isn’t investing its private capital and yet there will be huge tax benefits that will accrue with success.”
Dublin-based Providence announced in July the discovery of more than a billion barrels of oil in the Barryroe field about 30 miles south of the Irish coast. That project is likely to be profitable even if oil prices fall to $20 or $30, O’Reilly said at the time. A barrel of benchmark Brent oil for November settlement traded at $116 today.
The Dalkey Bay project has a 20 percent chance of success, according to Job Langbroek, an oil and gas analyst at Dublin-based stockbroker Davy. Oil and gas finds across the sea near Liverpool in England bode well for a discovery in Dublin Bay as proof of hydrocarbons, he said.
At Finnegan’s, which drinkers say is Bono’s local bar when he’s home, some regulars are backing the project. Pub owner Dan Finnegan says the country needs the exploration to help ease Ireland’s economic travails, which started in 2008 with the collapse of the property market and ensuing banking crisis.
“Let’s get the show on the road,” said Gerard Pierse, 70, a retired engineer enjoying a drink at Finnegan’s. “There is a whole lot of oil out there.”
Providence plans to begin exploring there next year, according to O’Reilly, who estimated recoverable oil from the project at 250 million barrels.
Any spill from that could leave a large swathe of Dublin’s coastline contaminated, according to Philip O’Donoghue, a software developer, who in January helped set up Protect Our Coast, a group that opposes the drilling. The risk of a large gush from a well blow-out is “extremely small,” O’Reilly said.
“Who is going to want to come to a country that has just had a major oil spill?” said O’Donoghue, a Dalkey resident who kayaks off the shoreline.
Local fisherman have also objected that the drilling site is in the middle of fishing grounds for crab and scallops and even a small spill would destroy that industry, according to submissions sent to the government.
In Ireland, local opposition can be a powerful tool. Royal Dutch Shell Plc’s development of a gas field off Ireland’s west coast has been mired in delays since its discovery in 1996. Locals concerned about the proximity of pipes to their homes and the environmental impact on the area continue to fight plans to bring gas onshore from the field by early 2015.
With its pretty street vistas and clutch of upmarket bars and restaurants overlooking the bay, Dalkey has been a magnet for the rich. Eddie Irvine, a former Formula One motor racing driver, along with film director Neil Jordan have lived there.
While local celebrities haven’t joined the campaign, more than 300 people attended at three meetings earlier this year, and voted in favour of a public inquiry before drilling begins, according to O’Donoghue. A London-based spokeswoman for Bono said in an Oct. 12 e-mail that the singer wasn’t immediately able to comment on the proposed drilling.
“Let them take a look, and hope they find nothing,” said Blaithin O’Brien, owner of Dalkey Pharmacy near Finnegan’s. “If they do find something, then let all the negotiations start. But I am not prepared to see Dalkey destroyed by it.”
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