Corrib gas project gets €90m boost

Shell Ireland has received a fresh cash injection of €90 million from its parent company to deal with the spiralling costs of the Corrib gas field project.

Documents filed with the Companies Office confirm the additional monies, as Shell Ireland said yesterday the 5km on-shore gas pipeline will only be completed by the second half of 2014.

The Corrib gas partners — Shell, Statoil and Canadian-owned Vermillion — are now nine years behind the initial target to start generating revenues from the field.

The initial estimate for developing the field was €800m and the final bill for completing the project is expected to be more than three times that, at nearly €3 billion.

The documents confirming the cash injection show that the Shell E&P Ireland’s Ltd’s (SEPIL) authorised capital now tops €704m.

A spokeswoman for SEPIL said yesterday: “The €90m is to support our ongoing activities on Corrib.”

The gas partner projects had hoped that gas would be brought ashore last year. However, this was before An Bord Pleanála ruled that half of the proposed over-ground pipeline would be unsafe, necessitating the application for the tunnel.

Spending on developing the field is expected to ramp up this year, with the partners expected to spend an additional €378m.

They spent €250m on the project last year. The total spend for the project at the end of December was an estimated €2.35bn.

The 2012 spend estimate arises from Vermillion confirming that it is to spend CAN$92m (€70m) on developing the field this year, arising from its 18.5% share of the field.

The spend is confirmed in Vermillion’s 2012 Capital Programme, where it states that it will also pay US$135m (€104m) to complete its terms of the purchase deal of its share from Marathon Oil.

In a written Dáil response on the progress of the field last week, Energy and Natural Resources Minister Pat Rabbitte said it is estimated that construction on the onshore section of the pipeline will take about three years. “First gas cannot, therefore, reasonably be anticipated before 2014.”

The SEPIL spokeswoman said: “Work on the on-shore pipeline, the final phase of the project to be constructed, is progressing well.”

It is 10 years since the Corrib gas project plan was approved by government. Since then, the proposal has become mired in controversy, including the jailing of the Rossport Five in 2005 and a number of confrontations between gardaí and protesters at the site of the Bellanaboy terminal in north Mayo.

Separate judicial review proceedings on the on-shore pipeline consents were settled in the High Court last year.

Shell has a 45% share in the field, with Statoil owning a 36.5% stake. The field — where about 400 people are employed — has one trillion cubic feet of gas and is expected to meet 75% of Ireland’s peak winter gas needs for up to a decade.

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