Corrib gas: What next?: ThePost.ie


TCH Archives > Sunday Business Post > 2006/05/07 > Corrib gas: What next?

Corrib gas: What next?
Sunday, May 07, 2006 - By Laura Noonan
Minister for Communications, Marine and Natural Resources Noel Dempsey last week finally gave Shell the green light to go ahead with the development of the Corrib gasfield, subject to certain conditions.

For years Ireland has been living vicariously on its supply of energy, sourcing just 15 per cent of its gas from local reserves around the island.

Now, with the Corrib field set to come on-stream in the coming years, the country might be able to source more than half of its gas reserves locally.

Last week’s development ends years of wranglings between Shell and various authorities over how the gas from the Corrib off the west coast should be harnessed and brought into the Irish network.

But the battle isn’t over yet.

Dempsey may have given Shell the nod, but the local community has yet to weigh in; groups such as Shell to Sea and the Rossport Five remain to be convinced.

Shell E&P’s chief executive in Ireland, Andy Pyle, has said that the project won’t proceed without the support of the ‘‘vast majority’’ of local residents.

Whether that ‘‘vast majority’’ will include Shell to Sea and the Rossport Five remains to be seen.

‘‘I am confident that we’ll reach an agreement and it is essential that we do so,’’ said Pyle.

‘‘Corrib, frankly, is too important to Ireland not to develop it.”

How important is the gasfield?

Throughout all the battles and disputes around the gasfield, one thing that has rarely been up for debate is whether Ireland needs Corrib. The gasfield is the second largest found off Irish waters, the largest being Kinsale which was discovered in 1971.

For the first four to five years of its lifespan it has the potential to supply 50 to 60 per cent of Ireland’s gas supply, a percentage that will trail off over the subsequent 10 to 15 years.

Pyle said that all of this gas would ‘‘absolutely’’ go to Ireland.

‘‘We are not in a position to export gas from Ireland,” he said.

‘‘The interconnectors [pipes used to bring gas from Ireland to Britain] are only designed to operate in one way. They could be changed but that would require Ireland to be fully self-sufficient in gas.”

Once the gas at Corrib is finally harnessed, Shell will plug directly into the Bord Gais network through a specially constructed pipe. The gas will then be sold by Shell and its partners.

‘‘We haven’t completed sales agreement yet,” said Pyle.

‘‘It could be sold to different customers, but obviously Bord Gais is a likely customer. We’d expect to be making public statements on that in the next couple of months.”

If the local issues are resolved quickly, Pyle said Corrib gas could be in the Irish network by the end of 2008.

Pyle said that Corrib should have some impact on the retail price of gas in Ireland.

‘‘Gas will be slightly cheaper because of reduced transport costs,” he said.

‘‘Historically, uncertainty has driven prices up. The availability of Corrib gas gives a lot more certainty that the gas is available and will be available in Ireland. It will avoid prices going up, there’s absolutely no doubt.” However, a spokeswoman for Bord Gais said that the Corrib gas would not necessarily result in lower gas prices.

‘‘The price of gas from the Corrib field will be linked to British wholesale prices, as the two gas markets are integrated and Corrib gas will displace some imports,” she said.

How secure is the gas supply?

While Corrib may help to hold down the price of gas, the main benefit it will bring to Ireland is security of supply. Ireland imports 85 per cent of its gas, with the rest coming from gas fields in Kinsale and at the Seven Heads.

The situation contrasts starkly with the situation a decade ago, when 95 per cent of our gas came from local sources.

In future, the country’s dependence on imported gas looks set to grow - Kinsale is in decline, and the Seven Heads site has produced a fraction of what it once promised.

Dempsey told the Dail on Wednesday: ‘‘We need an indigenous gas supply for the very obvious reason that, in the future, Ireland will be at the very end of a very long supply chain bringing gas from Russia to Europe.”

Being at the very end of this very long supply chain leaves Ireland in a precarious position.

All of the country’s imported gas passes through a single pipeline in Scotland. If this pipeline were to rupture, even temporarily, the consequences would be instant and catastrophic.

‘‘If that pipeline were broken, it would put out the gas supply for this island,” said John Fitzgerald, a research professor with the Economic and Social Research Institute (ESRI).

‘‘With a very large portion of our electricity supply dependent on gas, it would cause massive disruption.”

Ireland does have a gas supply back-up, in the form of an electricity interconnector which can give up to 500 Mw of power at any one time.

A second interconnector, with a similar capacity, is planned and will probably be in operation by 2012.

However, Ireland’s energy demands peak at almost 5,000 Mw, so even the combined force of the two interconnectors would be futile if the gas pipe ran into trouble.

‘‘Corrib will reduce the danger of a serious outage in Ireland from a 1 in 50 or 1 in 100 chance to a 1 in 10,000 chance,” said Fitzgerald.

Are there supply solutions?

While Corrib is hailed as a solution to Ireland’s security of supply issues, few would claim that Corrib, on its own, could work as a permanent fix. For one thing, its resources are finite.

‘‘Corrib is about two thirds the size of Kinsale,” said Fergus Cahill, head of the Irish Offshore Operators Association.

‘‘It will be significant for four to five years, but it will drop off then and we’ll need to find something else.”

Several other companies are exploring gas fields around the Irish coast. Providence Resources is one of the most prominent contenders. Its most advanced site is at Spanish Point in the Porcupine Basin.

The company’s chief executive, Tony O’Reilly Jnr, said he was confident that Spanish Point could provide all of Ireland’s gas requirements, and more, as early as 2011. The site has to undergo one further drill before it can be declared commercial - this is expected to take place next year.

‘‘Ireland is at the end of the European supply channel,” said O’Reilly.

‘‘I firmly believe that with our efforts and those of other companies, we could be at the beginning of the European gas supply network. That is a big prize.”

Exploration isn’t the only way to make Ireland’s oil supply more secure, but it is billed as the best.’ ‘One alternative is for the taxpayer to pay to strengthen the pipeline system in Britain to reduce the chance of a fault,’’ Fitzgerald said.

The government is also looking at the possibility of storing some gas off Ireland’s shores, so that if there are any problems the country will have reserves that can be readily accessed.

‘‘The advantage of Corrib is that the taxpayer won’t have to pay for it, and the consumer won’t have to pay for it; it will be paid for by Shell,” said Fitzgerald.