On December 12, 1967, the then Minister for Industry and Commerce, George Colley, introduced the Continental Shelf Bill to the Dáil to general bemusement, such was our understanding of Ireland’s offshore oil and gas potential at the time.
We now know that our continental shelf, the underwater extension of the Irish landmass, contains areas with the potential to provide energy independence and security.
Irish offshore exploration commenced two years later and the Kinsale Head gas field was discovered in 1971.
Despite some encouraging signs in the intervening period, commercial success has been slow to materialise and most of Ireland’s offshore remains underexplored.
Ireland is one of the most vulnerable EU countries in terms of energy security. All of our oil and more than 95% of our gas needs are imported.
The economic threat of the 1973 and 1977 oil crises is largely forgotten, while the memory of the 2009 Russia-Ukraine gas dispute, which cut supplies to southeastern Europe for 13 days, has faded.
However, many of the underlying factors leading to those interruptions still remain. A 2010 ESRI Working Paper estimated that the cost of losing three months of gas-fired electricity could equate to almost 50% of Ireland’s GDP.
However, this risk will be significantly lessened when gas from the Corrib field comes on stream before the end of this year. Importantly, Corrib will provide, at peak, up to 60% of our gas requirements.
Some 19 years after initial discovery, and with very significant delays, it will be the first gas produced from the Irish Atlantic margin.
The financial benefits of indigenous hydrocarbons are clear. Kinsale Head gas has transformed Ireland, being the primary enabler for the national gas pipeline infrastructure and stimulating significant industrial development in the Cork area.
The Corrib gas project has seen over €1bn spent directly with Irish companies and will contribute €6bn to Ireland’s GDP over its lifecycle.
Our third-level academic institutions have benefitted significantly from investment by the exploration industry and are now attracting increasing numbers of top international students to study and research geoscience-related topics here.
The real challenge is to balance growing demand, with the need to transition to a cleaner energy future over time. Many wish to see all fossil fuels replaced instantly by renewables.
However, this can only happen in a step-by-step manner if we are not to negatively impact economic recovery and development.
Hydrocarbons are key ingredients for the foreseeable future. There is simply no other realistic, reliable alternative currently available.
Gas, in particular, producing half the CO2 emissions and 10% the air pollutants of coal, is a natural partner to intermittent renewable energy sources.
The forthcoming Energy White Paper, charting the roadmap for Ireland’s energy future, will afford an opportunity for Government to state a vision of energy independence, including active support for offshore oil and gas exploration.
How do we achieve energy independence? A key element should be the exploration and development of our indigenous natural resources.
To date, 159 exploration and appraisal wells have been drilled in the Irish offshore, just 52 of which are in the Atlantic Margin basins, where a well can cost up to $200m.
There have been welcome initiatives from Government in recent times to stimulate exploration, most notably the Department of Communications, Energy, and Natural Resources-Eni regional seismic survey.
However, in June 2014, when the oil price was double its present level, changes in the fiscal terms for oil and gas were announced with an increase in the taxes payable in the event of commercial production.
Changing to an appropriate fiscal and regulatory framework, with good seismic data, innovative exploration ideas, and with Government encouragement, there is every chance of success.
The industry is, by nature, positive and I am optimistic that commercial discoveries will be made, significantly enhancing Ireland’s energy independence and security.
Pat Shannon is chairman of the Irish Offshore Operators’ Association.
© Irish Examiner Ltd. All rights reserved