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Will Rabbitte walk the plank over oil and gas resources?

Between The Lines
Oil rig
TIP OF THE ICEBERG? The SEDCO 711, a semi submersible rig, is pictured off the Mayo coast in 2009. The reserves of the  Corrib Gas field may be just a drop in the ocean.

Why can’t we make the most of our natural resources?


In the first of a new series, we examine the complex undercurrents involved in harnessing our offshore resources here in Mayo.

Áine Ryan

WHEREVER you are in County Mayo at this moment, drop what you are doing, and head to the nearest cliff. No need to jump. Just look out to sea. Did you know that under the vast Atlantic that batters, sometimes even caresses, this county’s long and rugged coastline there may be enough treasures to save this entire nation from bankruptcy.
Well, that is what some experts and commentators have been debating over the last month or so. Others, like Mayo native and Minister at the Department of Communications, Energy and Natural Resources (DCENR), Pat Rabbitte, are more sceptical, circumspect. Notwithstanding the fact that a 2006 study, commissioned by Minister Rabbitte’s department, projected there is about €750 billion worth of oil and gas off the west coast (at today’s prices). Ironically, in this light, the Corrib field is just a drop in the ocean.
The problem is that our present fiscal terms with interested oil and gas giants favour the bulging coffers of these super-rich multinational companies and not the empty vaults of the Irish exchequer.

Shouting stop
WHEN the late John Healy wrote ‘No One Shouted Stop’ in 1968 much of his native county was still dependant on traditional ways of farming and fishing. The seasonal patterns of rural Mayo followed work practises that reached deeply into the DNA of an ancient culture, underpinned by the spirit of community and meitheal. National sovereignty still shone brightly as a sweet achievement.
Five years later Ireland had joined the European Economic Community (EEC) fulfilling the modernising dream of former Taoiseach Sean Lemass. Bizarrely though it soon became clear it would be the Spanish trawler owners and the ‘concrete farmers’ of rich European countries that would be the biggest beneficiaries while peripheral regions like Mayo hemorrhaged new generations of farmers and fishermen.
No need to go into the disgraceful policy U-turns from Intervention to Quotas, Reps 1 to Reps 4. Simply evoke the memory of milk lakes, beef mountains and super-trawlers hoovering up the seabed as small craft limped into safe shelter.
Indeed, the U-turns and changes of heart made by successive government ministers – Ray Burke, Eamon Ryan  and now Pat Rabbitte – about the State’s stake in our untapped offshore resources are just as damningly shortsighted as those ivory tower decisions made by pinstriped EU bureaucrats about our farming and fishing resources.
Crucially though, there is one key difference. Minister Rabbitte has not yet  given away the 15 new exploration licenses applied for earlier this summer. Whether he is heeding the many experts who are  ‘shouting stop’ remains a moot question. 
His detractors argue he must wait until after a promised Oireachtas Committee review of the State’s current oil and gas licensing terms is carried out.

Giveaway or windfall?

ECONOMIST, Colm Rapple recently accused Rabbitte of ‘doggedly going ahead with his intention to grant more offshore exploration licenses on the basis of the flawed objective of encouraging more exploration activity’.
Rapple says: “It’s flawed because the real aim should be to get the maximum return for the Irish people from their natural resources. Some exploration is necessary to achieve that result but maximizing exploration won’t necessarily maximise the return.”
He suggests that to achieve some short-term return for our cash-strapped Exchequer a windfall royalty could even be imposed on the gas from the Corrib field when it starts to flow. Rapple contends that this is justified by the increase in prices since the find was made.
Let’s put Rapple’s comments in context. A month ago, Irish Times columnist, Fintan O’Toole wrote a provocative piece proposing that, since Ireland was about ‘to sign away almost all our resources in terms by far the worst in the developed world’, we should give joint ownership to Norway, which has developed excellent terms for its citizens. (Ironically, Norwegian citizens will benefit more than us from Corrib, because of Statoil’s partnership in the project.)
O’Toole argued that since the State was simply incapable of dealing with one of the key challenges and opportunities facing Irish people – getting the best from the potentially huge resource of offshore oil and gas off – we should therefore split the resources with a State with a proven track record.
The following day Minister Rabbitte challenged O’Toole‘s assertions stating that Norway’s enviable offshore geology made its strike rate incomparably better than Ireland’s. He cited the fact that 156 exploration and appraisal wells have been drilled in Ireland compared with over 1,200 in Norway and 4,000 in the UK.
Significantly, in one of the plethora of letters sent to the Irish Times during  the debate, Jim Sharkey, a former Ambassador to
Denmark and Norway, wrote the following.
“Both Norway and Denmark benefit from strong parliaments which carefully monitor the actions of government and civil service in dividing up a resource which is the property of the people. Their allocation of exploration and extraction licenses is accordingly transparent, well-informed and clearly subordinate to the public good.” With a Taoiseach and two government ministers from Mayo in the 31st Dáil, surely the public good of citizens from the tip of the Belmullet peninsula to the Silver Strand at Killary Harbour will be high on agendas.

Factsheet
IN October 2010 the Petroleum Affairs Division of the Department of Communications, Energy and Natural Resources invited international oil and gas companies to make applications to explore more than 1,000 blocks (250,000 sq km) in the Atlantic Margin off the west coast.
By May 31, the closing date, the department had received 15 applications for the 2011 Atlantic Margin Licensing round, the largest number ever received.
A 2006 study for the Department of Energy estimates a total reserve potential of 10 billion barrels of oil equivalent off the west coast. At recent prices of €75 a barrel, it is worth €750 billion.
A report published recently by SIPTU (Services Industrial Professional and Technical Union) urges that ‘no news exploration licenses for oil and gas should be issued by the DCENR until a detailed reassessment of the current licensing system is completed’ and argues for ‘more  direct state involvement in oil and gas exploration.’
We await an Oireachtas review with interest.