Corrib delay boosts Kinsale gas project

THE Scottish company set to develop the Seven Heads gas field off the coast of Kinsale has been given a boost by further delays in the Corrib gas development off Mayo due to a combination of planning hold-ups and other issues.

The E180 million development, 47km from Cork, is a boon for the area and production is likely to start on the facility next year with the first gas ashore by the end of 2003.

Ramco Energy, the company leading the project will also benefit from its agreement with Marathon to use its existing pipeline to transport the gas. The alternative of building its own pipeline would have been a far more costly and time-consuming option.

Ramco is going through the formal process of getting a petroleum license from the Department of Marine and Natural Resources which also entails submitting an environmental impact statement.

Ian Phillips, Ramco's vice-president of project development and the man in charge of the Seven Heads project, estimates that 560 billion cubic feet of gas is in place but only half of this will be recovered. "This is a low fraction but the reservoir hasn't been developed for 30 years and you cannot get as much gas out of clean sandstone. We're taking a cautious view but we are confident it could go higher in the future," said Mr Phillips.

Ramco is in discussions with several players to sell the gas.

"We are actively talking to everyone in the market BGE, IFI and several power stations. These include the big energy traders who are looking to enter the market following the liberalisation of the market."

Deregulation of the market has paved the way for independent suppliers and two power plants are currently being built in Dublin one by Northern Ireland Electricity in Huntstown and another by Statoil and the ESB at Ringsend.

There has been speculation that the Seven Heads development could lead to the building of a gas-powered station in Cork and the Commissioner for Energy Regulation has said that Cork would be a good place for a power station because the network is less crowded there than in Dublin.

One analyst yesterday issued a positive note on the development. "This project started out as a complete outsider to provide new indigenous gas to the Irish market, but has since moved into pole position. We expect the project profile to be enhanced in the coming months as capital spending gets underway. After all these years it looks as if the Celtic Sea will finally begin to deliver value," said Job Langbroek of Davy Stockbrokers.

Ramco is the main stakeholder in the development, with an 86.5% share following its buyout of US firm, Duke Energy's interest last month. Two other companies, Island Petroleum (currently 12.5%) and Sunningdale (1%) have an option to increase their shares.