The private sector should carry the financial risks of offshore exploration, writes Noel Dempsey.
The Corrib Natural Gas Field has featured prominently in the media since the committal to prison of five men from the Rossport area, in late June, on foot of their fears over the safety aspects of the onshore pipeline and the monitoring and inspection regime of the project as a whole.
I deeply regret that anyone should find themselves in this position. It has been a traumatic time for the men, their families and the local community.
However, I cannot intervene in a decision made by the High Court. But since the men were imprisoned on June 29th I have made every effort to create the conditions that would allow them to purge their contempt.
Initially, I made contact with the five men in prison, through an intermediary, to discuss their concerns. I proposed a safety review by an independent body as a response to those concerns. Despite this and my willingness to meet the men if they purged their contempt, I received no agreement.
Nevertheless, I ordered a comprehensive safety review of the onshore upstream gas pipeline, to be carried out by independent internationally recognised experts. Advantica was identified as the successful bidder and appointed on August 25th. Advantica is a world leader in the development and application of advanced hazard and risk assessment technologies for gas pipelines.
This safety review will examine critically all relevant documentation relating to the design, construction and operation of the pipeline and associated facilities. A particular issue of concern to local residents has been the proximity of the pipeline to inhabited dwellings. This will be addressed by the safety review. Advantica has been asked to identify any deficiencies in relation to safety and to make recommendations as to how these, if identified, can be remedied.
The second concern raised by the men relates to monitoring and inspection of the project as a whole. The monitoring and supervision of this project was originally agreed on a self-reporting basis between the department's Petroleum Affairs Division (Pad) and Shell Exploration and Production Ireland (Sepil).
I have now put new monitoring and verification procedures in place to ensure the company complies with all legal consents issued. Extra personnel have been assigned to the Pad. A new technical advisory group, independent of Pad, has been established to advise, monitor and verify works being carried out on this project.
Authorised officers are empowered to inspect works on a regular and "on-the-spot" basis. These revised monitoring arrangements have been included in the terms of the most recent consent issued to Sepil.
It has been commented incorrectly that there is no State agency with specific responsibility for onshore upstream pipelines. This is quite simply untrue. I have specific powers in relation to the safety of gas pipelines and I will use all legislative mechanisms available to me to ensure that safety in installation and operation, of such pipelines, is being addressed and policed properly.
The five men have represented the fears and concerns of their local community. However, there are others whose objections are ideological and whose concerns appear to relate in general to our policies on the exploitation of natural resources. We have three choices in relation to the development of Ireland's natural resources.
Firstly, we can leave the resources untouched; secondly, we can choose to spend taxpayers' money on offshore exploration; or, thirdly, we can license the private sector to do so.
Leaving these resources unidentified and untouched means we are 80 per cent dependent on imports. Our natural gas is imported through Britain from some of the most unstable regions in the world. Over the next few years, Britain is facing physical constraints in its own gas network, which the Commission for Energy Regulation says could impact on Irish imports.
It is vital that we have our own supplies to mitigate the impact of such an occurrence.
In these circumstances only the most extreme ideologue would argue that we should not explore for nor exploit these resources.
The next alternative is that the State should gamble as much as €20 million per well of taxpayers' money, at odds of over 30:1. That is what those who advocate the Norwegian model are asking us to do.
The remaining option left is licensing the private sector to undertake this risk and accrue the associated reward, after a 25 per cent tax take.
The rationale behind the terms is to encourage exploration in Irish waters. Despite the allegation that they are overly generous, there have been very low levels of exploration over the past 30 years. This year, no well will be drilled.
Only two companies applied in the latest licensing round for northeast Rockall and three companies for the previous Porcupine round in 2004. Hardly an indication that companies regard the terms as a giveaway.
If that situation changes and the Irish offshore emerges as a potentially productive area - and this can only be established through private sector investment and risk-taking - the Government will not hesitate to introduce terms which secure a higher take for the Irish people.
We are entering an uncertain period as regards energy supply and price. Also technical and other risks to our energy supply are increasing as our supply lines grow in distance and vulnerability. Not proceeding to identify and exploit our own energy resources, either fossil fuel or renewable, is an unsustainable policy stance. We must strike a balance in the design of our terms, so that the private sector will do this despite our major disadvantages. All that being said, safety in the exploration, production and operation of the full range of our energy infrastructure can never and will never be compromised.
Noel Dempsey is Minister for Communications, Marine and Natural Resources