The Isle of Man has joined forces with the British Geological Survey (BGS) to exploit previously untapped hydrocarbon reserves in its vast offshore territory. Part of a wider strategy to maximise the territory’s energy potential, not only would any successful gas production projects give an economic boost to the Isle of Man, the wider UK would also see both increased energy security and supply chain benefits.
In April 2016, the Isle of Man Department of Economic Development selected the BGS as technical advisors for the development of the hydrocarbons portion of its ambitious Offshore Energy Strategy. Not only will the partners be looking to investigate areas already known to hold gas deposits, BGS’s extensive knowledge of the region’s geology means a number of other potential targets will also be in their sights.
"We have 40 years’ experience working directly with the UK’s Oil and Gas Authority (Oga) on UK licensing rounds and internationally in places like the Falklands. Our regional knowledge of UK geology, including the IoM [Isle of Man], is very well developed, so we will make a running start in building interest and developing prospects," says Dr Margaret Stewart, a petroleum geoscientist at BGS.
The main focus of the strategy will be an area called Block 112/25 off the Isle of Man’s east coast, where BP detected gas in the 1990s. Back then, the oil and gas giant’s discovery was not deemed attractive enough for commercial exploitation, but it is hoped that, thanks to technological advances since the last prospecting was undertaken, economically viable discoveries can now be made.
"There was seismic work done, there was a well drilled and gas was detected but it was in tight sandstone. Obviously, technology has moved on since then, so that was the reason for thinking there could be potential and that we should try another licensing round," explains Dr Ken Milne, Director of Energy and Support Services at The Department of Economic Development, adding that BGS also believes there are a number of other potential targets in Isle of Man waters. These include the Peel Basin to the north-west and into the northern part of Quad 109.
The next step will be to launch a licensing round, potentially to coincide with the UK’s 30th round in 2017, for which BGS will be promoting prospects at the PROSPEX Show in December 2016. Then, once one or more companies have been selected to license blocks in offshore Isle of Man, it will be time for non-intrusive seismic surveying, and, if that produces promising results, the drilling of an exploration well.
Of course, any company that is interested in working with the Isle of Man and BGS to explore the region will have to meet strict health, safety and environmental criteria. As Milne explains: "It will be very much similar to the UK process; we will benchmark against the UK and use the UK procedures as much as possible, as they have a tried and tested method."
If exploration is successful, production would likely start in around 10 years’ time, bringing significant economic benefits to both the Isle of Man and the wider UK. "Obviously, we own the hydrocarbons so there is a financial benefit to the Isle of Man from production license agreements," Milne notes.
Based on a hydrocarbon tax similar to the UK, this could generate around £100m in revenue over 20 years for the Isle of Man Government. Offshore gas exploration and extraction could also generate jobs on the island in areas such as the installation, operation and maintenance of facilities.
When it comes to longer term supply chain and energy security benefits, these would likely be felt most in the UK. This is because the Isle of Man’s domestic oil or gas requirements are expected to be far too small to represent a viable market for any production facility, so any production would be piped towards the existing East Irish Sea Basin pipeline infrastructure and onward to the UK.
"Gas is going to be a significant contributor [to the energy mix] going forward and if we can help provide some gas into the UK market then that gives a little bit of security of supply," Milne remarks.
The development of the Isle of Man’s hydrocarbon reserves is just one part of a much wider Offshore Energy Strategy, which aims to maximise the territory’s energy potential. "Almost 90% of our territory is offshore," Milne explains, "So not only are we looking at hydrocarbon deposits we’re also looking to progress offshore wind, marine renewables and create an energy interconnector hub to move energy from North to South and West to East."
Already, DONG Energy has signed an Agreement for Lease (AfL) with the Isle of Man Government to carry out preliminary investigations for a potential offshore wind farm in the Irish Sea, while Manx Tidal Energy is investigating the potential for tidal power development in the region.
Going up one level further, this activity falls under the umbrella project Vision 2020, which is designed to boost the Isle of Man’s economy through initiatives in sectors including manufacturing, financial services and food and drink, as well as offshore energy.
So where will the energy piece of the puzzle be in four years’ time?
"DONG Energy is doing their surveying work now, we’ve got a tidal developer doing some prospecting work, we will move forward with the interconnector hub to see if it’s financially and technically viable, and we will have completed our licensing round for hydrocarbons," Milne summarises. "But when it comes to building wind farm projects or producing hydrocarbons, we’re realistically talking post-2020."