Don Sheridan - The Irish J.R.

Kerry Dougherty talks to the managing director of Atlantic Resources and considers the government's options.

In the weeks since news of the Irish offshore oil discovery broke the names of high rollers like Tony O'Reilly, Jim Stafford and Gerry McGuinness have been bandied about as Ireland's new oil barons. But the man behind the find - who believed for almost 20 years that the oil was there - is 54 year old Trinity educated geologist, Donald J .R. Sheridan, managing director of Atlantic Resources.

With the strike, Mr Sheridan could have been transformed from an estimated £50,000 a year corporate executive into one of Ireland's richest men. Could have, that is, if he had exercised the options on his 110,000 shares of Atlantic Resources stock which are his for the next seven years at £1 each. When Atlantic Resources stocks peaked last month at £6.60 on the Irish market, Mr Sheridan could have made more than £500,000 overnight.

Instead, Don Sheridan held on to his options, signalling his own belief that the offshore strike is so good that in the future Atlantic Resources shares will soar far beyond the six pound mark.

In an interview shortly after the oil discovery, Mr Sheridan exhibited remarkable cool for a man who had suddenly struck oil: "I had a fairly good idea the hydrocarbons were there. Geologically speaking, the Celtic Sea is very like the North Sea," he said. "We were quietly confident that we would find oil."

Sheridan and the other oil executives involved are curiously secretive about the exact day oil was found. On the day in question, however, Mr Sheridan said he was informed of the discovery in his daily progress report which had come to him regularly since that particular test began on June 16. The geologists at Atlantic Resources read their reports and then exchanged low-key congratulations. They did not pop the cork on a bottle of Dom Perignon or hop a helicopter to the rig to see for themselves.

"We knew it was coming any time at that point. The reports we were getting indicated the oil was there," he says.

The massive public interest which followed, combined with the skyrocketing value of Atlantic Resources shares, surprised even a seasoned geologist like Sheridan who summed up the Irish atmosphere in a word: "Hysteria. That's the word for it," he said, shaking his head. "You don't get this sort of reaction when you strike oil in the middle of Libya."
We should know. In his more than 40 years in the field of oil exploration, Don Sheridan has been involved in oil strikes in the Persian Gulf, Lebanon, the UK, Canada and America. (That much moving around is normal for members of his profession he said, describing himself and colleagues as "global itinerants".)

Sheridan's longest stint to date has been in Ireland where he has lived with his wife and four children "on and off" for about 20 years. Until 1981 Sheridan was the chief geologist with Marathon Oil, the people who are bringing you Kinsale Gas. In 1982 Sheridan was lured to Atlantic Resources, reportedly with the attractions of lucrative stock options, the promise of vast exploration in the Celtic Sea and the position of managing director.

It is widely believed that Don Sheridan was frustrated at Marathon because the company was short of cash for exploration. This situation is blamed on the deal struck between the Government and the company over the Kinsale development. When asked if that was his reason for leaving Marathon, Mr Sheridan instead preferred to cite his "geologists as itinerants" theory of oil exploration. When asked if Marathon has been financially crippled by the Government on the Kinsale Gas deal, he replied that he also had heard rumours to that effect but would make no comment on them.

Whether it was because of his experience at Marathon or just inherent in the oil executive psyche, Mr Sheridan has an intense scepticism about the role Government should play in mineral exploration and exploitation. Speaking of his deep belief that the oil is there, Mr Sheridan said he feared that too much Government interference and mismanagement could result in Irish oil industry being left in a shambles like the Navan mines.

"We have an extremely sorry history here with the Navan experience," he said. "The Navan mine is one of the richest lead zinc deposits in all of Europe. Despite that there is precious little money coming into this country for mineral exploration because of the Navan situation."
 
Observers point out, however, that zinc and oil exploration are two different matters. While the two Navan mines have been big money losers since the mid-1970s, it is only partially due to state interference and mostly the result of a depressed zinc market. The commercial value of zinc is constantly in flux, while oil is always in demand and the market is consistently high.

In an interview with Magill, however, Mr Sheridan returned repeatedly to the theme that Governments should steer clear of oil exploration.

"Governments the world over have made a mess of oil exploration and there is no reason to believe Ireland will be any different," he said. "Exploration is a hell of a risky business and I honestly don't believe that state oil companies are the answer."

Under the terms of the Ireland Exclusive Offshore Licensing laws, the Government is entitled to royalties from the crude on on a scale rising from 8 to 16 percent. It is also entitled to a one time bonus payment if the field releases a very high level of production.

In addition, the State has the right to 50 percent participation in the venture. This is presumably a higher stake than the Atlantic Resources would like to see the Government make in its wells, although it is a modest interest compared to the situation in the Middle Eastern OPEC nations and Britain and Norway in the North Sea.

Sheridan reasons that if the oil companies take the risk and spend the money on exploration they are certainly entitled to a lions share of the revenue from the wells.

Of course they're concerned about what the Government is going to do," said Fianna Fail's George Colley, who granted Atlantic Resources its exploration license when he was Minister for Industry and Energy. "They would like it if the Government sat back and did nothing, but they knew very well what the framework was when they signed."

Although the present Government says it has no intention of nationalising the oil companies or establishing another state oil company to augment the Irish National Petroleum Corporation, secret talks are presently taking place between the Government and representatives of INPC as to what role Irish Petroleum should play in the future.

Mr Colley says he has "no doubt" that the Government is contemplating a move into exploration of its own should the Atlantic Resources field prove economically viable.

Chances of the field proving commercially sound are high according to some observers who point to the low costs of developing such a close-in field in shallow water.

While it will be some time before Atlantic Resources and its two partners, Gulf and Union Oil, evaluate the Irish find, current estimates place possible production in the range of 40,000 to 50,000 barrels a day. That is miniscule by international standards - the smallest well in the North Sea produces 100,000 barrels a day and the largest pumps 1.6 million every 24 hours.

What would 50,000 barrels of homegrown crude mean to the average Irish consumer? Absolutely nothing unless you bought Atlantic Resources shares and held onto them like Don Sheridan.

"An oil discovery of this size will be of enormous benefit to the beleagured Irish economy but would not really mean much to the average Irish citizen," said Bart Collins, editor of London's Petroleum Times. "The oil companies involved would undoubtedly put pressure on the Government to maintain Irish oil prices at previous levels and to stay in line with other oil producing countries. Basically, the prices at the pump would stay the same."