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Dáil Éireann debate -
Wednesday, 17 Nov 1999

Vol. 511 No. 1

Adjournment Debate. - Gas Pipeline Extension.

I thank you, a Leas-Cheann Comhairle, for giving me permission to raise this matter on the Adjournment. I am glad to see here the Minister of State at the Department of Public Enterprise, Deputy Jacob, who has responsibility for this matter.

I am concerned at the recent proposal by Bord Gáis Éireann to seek approval under section 8 of the Gas Act, 1976, and the Gas (Amendment) Act, 1998, to extend the national gas grid from Dublin to Galway and onwards to Limerick without taking into account points west and north-west of that line. Bord Gáis made a proposal to the Government of which I was a member to run a pipeline, I believe, from Dundalk to Sligo and then southwards to serve all the major towns such as Ballina, Castlebar, Tuam, Galway and points further south. It may be that there is a simple explanation for this. Yesterday, the Minister and Minister of State, who have responsibility for bringing gas ashore and for distributing it on the mainland, answered a series of questions about Enterprise Oil's find in the Corrib field off Achill Head. This reputedly contains 1.3 trillion cubic metres of gas.

I am concerned that the Bord Gáis proposal to extend the pipeline from Dundalk through Athlone, where the Minister for Public Enterprise resides, to Galway and on to Limerick does not cater for the region to the west and north-west. It may be that Enterprise Oil may have informed the Department that it will build its own pipeline if the find is deemed to be commercial. That may be the reason that Bord Gáis has not included this in its proposal. The Minister may be able to confirm that. Given that in the national development plan which was published earlier this week £40 billion will be spent over the next seven years, that Objective One status was granted to the Border, midlands and western region following a long struggle and that the Western Development Commission has been established with the specific task of attempting to raise the economic and industrial base in the west to a level similar to that in other areas, this major proposal by Bord Gáis should not leave that vast tract of territory without a pipeline.

The ESB recently reported that there is a major power shortage in the loop west and north-west and that no heavy industry of serious consequence can be placed there because of lack of power. Natural gas is a major source of power and Bord Gáis, while proposing to extend its pipeline, intends to build a second interconnector to Scotland. This would mean that if Enterprise Oil was to declare its find commercial and bring the gas ashore, and if it followed through with further appraisal wells on the Shannon prospect south of the Corrib field, that the second interconnector could be used as an export conduit on to the British mainland and the European grid.

I am not sure if the Minister of State can reply to my questions. Has Enterprise Oil confirmed that it would be prepared to build its own gas pipeline in the western region to serve the west and north-west? Has it confirmed that, in preparing to declare the field to be commercial, it is going to land the gas in County Mayo, specifically, either in Ballyglass or Killala? This is critical, both for the establishment of a power base, perhaps at Bellacorick, for the generation of electricity and as a strong incentive for major industry to locate in the region.

Given Government statements, and the fact that the part of the country to which I refer has been neglected and is recognised as being disadvantaged both nationally and in Brussels, it is strange that Bord Gáis' major proposal to extend the gas pipeline ignores that entire region. An explanation is required in this regard. If Bord Gáis has not provided such an explanation or if Enterprise Oil has not confirmed that it intends to build its own gas pipeline, the Minister of State should give the necessary instruction to Bord Gáis that the proposal be altered to include a provision for the pipeline to run to Sligo and the north-west and to run south from Sligo to Ballina Castlebar, Tuam and Galway.

If and when this gas is brought ashore from the Corrib field, the area in question will be able to avail of it or, if necessary, new gas can be imported through the existing interconnector or the second interconnector, if it proceeds. It is necessary for an area, even the one in which the Leas Cheann-Comhairle lives, to have a strong power base to use as a marketing instrument to attract industry.

There is already too much gas in Monaghan.

Such a base helps one deal with the questions and queries raised by investors regarding the supply of power in an area.

I understand that there will be a number of underwater templates in the case in question. The landing point is critical. On another occasion we will deal with the benefits that can be derived for the local economy in the western region if and when this find is deemed to be commercial and brought ashore.

Why was the region ignored in the Bord Gáis proposal? Is it because Enterprise Oil intends to build its own pipeline? Will the Minister of State instruct Bord Gáis to change the proposal—

It is because the Minister lives in Athlone.

Deputy Carey, please allow Deputy Kenny to conclude.

—and include the area in question?

I thank Deputy Kenny for raising this matter and giving me the opportunity to clarify the situation in relation to a proposal by Bord Gáis Éireann to construct a pipeline, which has been widely reported on in the past week.

BGE submitted an application to me recently seeking approval under the Gas Acts, 1976 to 1998, to construct a natural gas transmission pipe between Dublin – not Dundalk – Galway and Limerick. The effect of this would be to complete a national gas ring main that would bring gas west, facilitate the transmission of additional gas to the south and obviate the need to strengthen the Dublin/Cork pipeline which is reaching full capacity. The application is being examined in my Department in the light of my obligations under the Gas Acts. I have not yet given my consent to it. The application will also be examined in the context of the emerging regulatory environment for the liberalised gas market, the outcome of recent studies into gas demand and infrastructure requirements to the year 2025 and the possibility of gas being developed commercially off the west coast.

In 1996, Bord Gáis carried out a detailed study of a number of network extensions to the west. None of the scenarios studied by Bord Gáis at that time showed a positive return on the investment involved and the company was not in a position to undertake the project in the absence of Exchequer or EU funds of the order of £60 mill ion. From a shareholder perspective, I will need to be satisfied that this latest proposal satisfies normal commercial criteria for the construction of gas pipelines. BGE's balance sheet would have to be able to support such a project, taking account of BGE's current business plan and opportunities for its future development as a best practise gas utility. A project of this magnitude would have to be examined in detail before approval could be given.

The proposed pipeline will also have to be examined in the context of the changing regulatory environment for the natural gas industry. The industry in Ireland, and in other member states of the EU, is in a state of change following the entry into force of the EU Gas Directive. All member states, including Ireland, are currently in the process of making the relevant changes to the domestic legislation governing their national gas industries in order to comply with the provisions of this directive.

Liberalisation of the market offers possibilities for new players to become involved. We have been to the fore in opening our natural gas market to competition. Already, players other than BGE are entitled to become involved in the supply of natural gas to the competitive section of the market and to build their own pipelines. Some have already expressed an interest in doing so. In the newly liberalised gas market, BGE will be treated in the same manner as any other player.

Another potentially influential development is the gas find in the Corrib field off the Mayo coast. While the prospects for the field look promising, the consortium involved in the exploration of the field has indicated that further appraisals will have to be carried out before a decision can be taken on whether the field is to be developed commercially. When the board of Enterprise Oil visited Ireland recently, I urged its members to clarify their intentions in this regard as quickly as possible. If the field is developed commercially, it will have a significant impact on the natural gas industry here. It is prudent that we await developments in relation to the Corrib field but we cannot wait indefinitely.

It is in this wider context that the application by BGE will be considered. In the meantime I will be asking BGE to clarify the details of its pipeline proposal. I must be convinced that it is commercially viable and that it will benefit the Irish natural gas industry and gas consumers.

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