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Gas Exploration Licences (Continued)

Tuesday, 4 December 2012

Dáil Éireann Debate
Vol. 785 No. 1

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(Speaker Continuing)

[Deputy Brendan Griffin: Information on Brendan Griffin Zoom on Brendan Griffin]  Recent significant oil-related developments off the Cork and Kerry coasts signal major potential and Members must ensure the most is made of it. Significant opportunities now present themselves before any oil is actually extracted and preparation and exploration could prove to be significant money spinners and employers for both regions and the State as a whole and Members must be alert to this. They should not wait any longer as the opportunities are there now. This is coming in the midst of the greatest economic crisis the State has ever known and oil and its associated benefits offer great hope. This must be harnessed and put to tangible good use for the people of the country and this is the reason I call on the Government to consider the establishment of this State body to co-ordinate and maximise the potential of the oil industry.

Historically, State bodies such as Bord Iascaigh Mhara and Bord na Móna have delivered major benefits for the State by making the most of the natural resources available to their respective sectors. I envisage this also would be the case in this regard. Oil now offers a massive wealth opportunity to the people and the State must step in and make the most of it for this and for future generations, who will benefit therefrom. This agency should comprise professional expertise brought from the oil industry and it would act as a one-stop shop on oil-related matters. Among other tasks, such an agency would liaise with oil companies to provide access to Irish companies, services and trained personnel. It also would advise the Government.

Acting Chairman (Deputy Olivia Mitchell): Information on Olivia Mitchell Zoom on Olivia Mitchell I must come back to the Deputy as Deputy Ferris's time now is being taken.

Deputy Brendan Griffin: Information on Brendan Griffin Zoom on Brendan Griffin I had almost finished and was saying the agency would advise the Government on policy areas.

Acting Chairman (Deputy Olivia Mitchell): Information on Olivia Mitchell Zoom on Olivia Mitchell I will revert to the Deputy for a moment later.

Deputy Martin Ferris: Information on Martin Ferris Zoom on Martin Ferris Earlier this year, the Oireachtas Joint Committee on Communications, Natural Resources and Agriculture produced a report, which had the unanimous support and backing of its members, on offshore exploration by the oil and gas industries. In preparing this report, the joint committee sought advice from the Norwegian oil ministry and the Norwegian ambassador and other interest groups also appeared before it. The report is available and I understand it is probably in the Minister's office. It should be considered in respect of exploiting this potential for the benefit of all the people and not for the oil companies or for a golden circle. The potential of two discoveries off Dunquin and off the South Porcupine Basin offers quite substantial hope for the economy if they are used properly for the common good. The tax regime that forms part of that potential should be consistent with the proposals in the aforementioned joint committee's report.

I also wish to bring to the Minister of State's attention that Fenit Port, County Kerry, has a history and a great track record of servicing oil rigs off the west and south-western coasts from the 1970s and 1980s in particular. It also has available skilled personnel who worked as roustabouts or roughnecks or who worked in galleys or as derrick men and so forth. Many people there still have such experience and some people continued to work right up until the late 1990s by travelling to Aberdeen and so on. County Kerry has almost twice the national average rate of unemployment. Moreover, it received no visits from the IDA this year and nothing has come into the county in recent years. Consequently, from the perspective of the local economy, it would be essential for Fenit to be considered as a port for supplying the oil rigs off the coast.

Acting Chairman (Deputy Olivia Mitchell): Information on Olivia Mitchell Zoom on Olivia Mitchell While I must ask the Minister of State to respond, I will revert to the Deputy.

Minister of State at the Department of Communications, Energy and Natural Resources (Deputy Fergus O'Dowd): Information on Fergus O'Dowd Zoom on Fergus O'Dowd I thank both Deputies for putting this matter before the House for debate. It is an important and current debate and I wish to refer to some of the facts. The first fact obviously is that were oil to be discovered off the Kerry coast or off any other part of the coast, it would indeed be good news. I can confirm for Members that there has not, as yet, been a discovery of oil off the Kerry coast and the last time an exploration well was drilled in this area was more than a decade ago in 2001. Unfortunately, that well was dry. On a more positive note, I can inform Members that planning for an exploration well in 2013 on the Dunquin prospect is being advanced. There has been quite a deal of media coverage on the topic of oil and gas exploration in recent months, including some articles about potential major fields. In some instances, these articles have related to exploration authorisations where the holders have yet to commit to exploration drilling or even to acquiring new seismic data. Forecasts made in such circumstances must be put into perspective. In order for a discovery to be made, there must first be exploration drilling and such drilling in the Atlantic is expensive and involves a high financial risk.

Over the past decade, there has only been an average of a single exploration well per year. In recent years, however, there has been an increase in the number of exploration authorisations granted in the Irish offshore area. In the coming years, this should result in an increase in exploration activity and in exploration drilling in particular. As a consequence of the current low level of drilling activity, there are no offshore drilling rigs permanently based in Ireland. While the current level of exploration activity provides some employment opportunities in ancillary supply and support services, along with specialist port services, there is unlikely to be a substantial oil industry based in Ireland until there is a much higher level of exploration drilling in Ireland's offshore areas. Not alone has drilling activity been low, but it does not all occur in one area and this has implications in terms of anticipating where support services should be located. Clearly, a drilling rig off the coast of County Donegal is likely to be supported from a different port to a drilling rig off the County Kerry coast.

Ireland has a clear policy of actively encouraging investment in oil and gas in order that we can enjoy both economic and energy security. A reasonable increase in exploration activity levels resulting in further commercial discoveries of oil and gas certainly would result in increased employment and economic activity generally. It also would result in significant financial benefits to the State from the higher rate of corporation tax that applies to profits from production of oil or gas. For the present, however, one must remain realistic regarding both the pace and nature of the exploration effort.

Deputy Brendan Griffin: Information on Brendan Griffin Zoom on Brendan Griffin One does not need to wait for oil to start flowing for the money to start flowing as in itself, exploration is a major industry that offers a massive spin-off to local communities. For example, airports, seaports - as were mentioned - and local hotels could benefit greatly from such exploration. Now is the time to be proactive in this regard and to put in place a one-stop shop for the industry to co-ordinate this effort. There is a need to be proactive in this respect and I am very hopeful that there will be major reserves that can be brought to the surface at some point. However, the very fact of finding it will cost a great deal of money. As the Minister of State indicated, there will be massive expenditure involved and Members must ensure that before any oil is brought to the surface, the people of the country will benefit from such expenditure. This is the reason the particular conduit I have proposed should be put in place for the industry. I again ask the Minister of State to reconsider the matter and to give serious consideration to this proposal.

Acting Chairman (Deputy Olivia Mitchell): Information on Olivia Mitchell Zoom on Olivia Mitchell I interrupted Deputy Ferris earlier. Did he want to come back in?

Deputy Martin Ferris: Information on Martin Ferris Zoom on Martin Ferris The Porcupine Basin was explored in 1978, 1979, 1980 and 1981. A number of exploration wells were drilled there and oil was discovered. However, because of the depth of water at which the oil was discovered - I believe it was approximately 1,700 ft. - modern technology was not then available to deliver the oil to the surface and to the shore and the find was capped and left there. I assume the Petrel Resources company has returned to those areas on the south Porcupine Basin, where it is due to start drilling in the new year. Based on its findings as a result of the two licences it purchased last year, Petrel Resources has stated it believes the area in which it intends to drill has the potential to deliver 1 billion barrels of oil. If that is true, one would be talking about a monetary value of between €85 billion and €100 billion, which would be a significant start. In addition, Providence Resources also has claimed to have made a big discovery off Dunquin.

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