Priority Questions

Electricity Transmission Network

Michael Moynihan

Question:

1. Deputy Michael Moynihan asked the Minister for Communications, Energy and Natural Resources if he is satisfied with the current operation of the electricity grid in the two jurisdictions on the island of Ireland; and if he will make a statement on the matter. [36725/13]

The operation of the electricity grid is a matter for the commercial State companies concerned and is not one in which I have a function; neither do have I a role in making a statement on the operation of the grid in another jurisdiction.

However, on a more general note, my views and the views the Government on energy infrastructure, which includes the electricity grid, are outlined clearly in the 2012 Government policy statement on the strategic importance of transmission and other energy infrastructure. As stated in that statement, energy is the lifeblood of Ireland’s economy and society. Electricity and gas demand for businesses and households must be met safely and securely on a continuous basis, 365 days a year. Our ability to attract and retain foreign direct investment and sustain Irish enterprise depends on guaranteeing energy supply at competitive cost at all times. Ireland needs to deliver a world class electricity transmission system which meets its needs in the 21st century.

EirGrid is the independent State-owned body responsible for the operation, development and maintenance of the electricity transmission system. It is licensed as the electricity transmission system operator, TSO, by the Commission for Energy Regulation, CER, and operates according to the provisions of this licence and under all relevant national and European legislation. The Government endorses the major investment under way in the high voltage electricity transmission system under EirGrid’s GRID25 programme. GRID25 is the most important investment in Ireland’s electricity transmission system for several generations and will position our energy system for decades to come. The GRID25 projects, including GridWest in Mayo, the Meath-Tyrone transmission line and GridLink in the south and east, are vital developments for the regions and for the economy and society as a whole.

It is Government policy and in the national interest, not least in the current economic circumstances, that these investment programmes are delivered in the most cost efficient and timely way possible, on the basis of the best available knowledge and informed engagement on the impacts and the costs of different engineering solutions.

The integration of the grid by both jurisdictions on the island of Ireland is fundamental to our energy security for the future. There are issues relating to energy security in our neighbouring island. However, there is a plan to have the EU energy system fully integrated by 2014. Is the Minister satisfied that what is in place and the infrastructure being developed will allow us to be fully integrated into the EU internal energy market by 2014? With regard to ensuring there is absolute co-operation between the jurisdictions in the North and South, is there is a need to have discussions about the energy market and energy supplies brought under the remit of the North-South Ministerial Council?

The thrust of electricity policy is towards integration. There is an all-island market on this island and it is functioning very efficiently. However, the Deputy is correct that meshing the two systems is desirable and very important. The critical piece of infrastructure between Tyrone and Meath is necessary for that. It is estimated, not least by the regulator, that the cost of not building the Meath-Tyrone line is between €20 million and €30 million per annum. The regulator now thinks it will be closer to €30 million forgone as a result of it not being built. The planning application will be lodged at the end of this year. Hopefully, we can navigate our way through the difficulties that still exist. There is community resistance to it and we have leaned over backwards in trying to meet those concerns.

The other point I raised was the EU Internal Market by 2014. What is the position with being fully integrated into that?

The completion of the internal energy market was a major issue during the Irish Presidency. We managed to progress the file on that issue quite significantly. It is important, however, to draw a distinction. Completion of the internal energy market by 2014, and if memory serves we have a two-year derogation, is to deal with the policy aspects in terms of design, regulation and so forth. It does not mean that the physical infrastructure will be in place by 2014 to integrate the European electricity system. It means the spade work ought to be completed by then. Ireland is one of the few countries that has made progress on that in terms of the east-west interconnector between Wales and Ireland. However, with regard to the phenomenal investment that will be required to give physical expression to the completion of the Internal Market across Europe, we are talking about billions of euro. It is going slowly.

However, there is a plan for that.

Yes, there is indeed.

Offshore Exploration

Michael Colreavy

Question:

2. Deputy Michael Colreavy asked the Minister for Communications, Energy and Natural Resources if his attention has been drawn to a sinkhole emerging from drilling activity at the Corrib gas project; and if he will make a statement on the matter. [35675/13]

I can confirm for the Deputy that the Corrib developers have notified my Department about depressions in Sruwaddacon Bay, which are caused by air escaping during tunnel boring machine "intervention" maintenance, and I wish to confirm that these depressions are not sinkholes. To clarify, the tunnel boring machine, TBM, being used by the developers to tunnel under Sruwaddacon Bay for the purposes of laying the onshore segment of the Corrib gas pipeline requires periodic inspection and maintenance of the mechanical components of the TBM cutter head. Inspections and maintenance on the TBM cutter head are carried out during interventions at above atmospheric pressure and are carried out in accordance with standard industry practice for tunnelling and Health and Safety Authority guidelines.

The air pressure is adjusted and stabilised to safeguard the health and safety of the tunnel operatives and maintain tunnel face stability within the excavation chamber, and is tailored to the anticipated ground conditions at each location. The duration of interventions will vary depending on the nature and extent of the works within the tunnel boring machine. There is always a potential for small scale air loss from the intervention activities, the air loss being a function of the permeability of the ground conditions, and where more permeable material or conduits are present this air loss may migrate to the surface. Local depressions in the seabed can arise as a result of the air loss. These are depressions in the sand and they can be about 50 cm deep when the tide is out. As set out in the works method statement provided by the developers, should such local depressions occur, mitigation by local raking will be undertaken when tidal and site conditions are suitable to accelerate the natural sediment reinstatement process.

If there is anybody left following "Oireachtas Report" at this stage, a Cheann Comhairle, they will certainly be fast asleep. I am nodding off myself.

Additional information not given on the floor of the House

The areas in which depressions have been observed are in intertidal areas of Sruwaddacon Bay, that is, in areas which dry out during low tide. As the TBM has progressed through the sands, there has also been some minor localised consolidation of less than 10 cm depth of sands along the tunnel trajectory. This consolidation was predicted in the environmental impact statement supporting the application to construct the pipeline and is expected to reinstate itself over a short duration as the TBM progresses.

My Department’s consultant tunnelling expert from Environ conducted his most recent site visit last week and a draft report on this visit, including his comments with respect to these depressions, will be published on the Department of Communications, Energy and Natural Resources website as soon as possible. It is important in the meantime to note that the depressions appear to have occurred as a result of air releases during TBM maintenance interventions with no evidence of the tunnel sealant bentonite release to the surface; the depressions have been small relative to the overall context of the bay and there is no evidence of contamination or of any significant environmental harm having occurred as a result of the these events; and in the current circumstances there is no foreseeable way that any of the air release could affect the integrity of the completed tunnel.

I thank the Minister for his reply. He referred to depressions but local residents describe them as sinkholes and they have erected warning signs along the tunnelling route relating to the final section of the Corrib pipeline. Regardless of whether one refers to it as a depression or a sinkhole, was a phenomenon of this nature predicted in the environmental impact statement submitted during the planning process relating to the project? Local people are of the view that these sinkholes - the Minister refers to them as depressions - constitute a serious risk. Do we have the word of anyone other than the company that escaping air is the only factor contributing to the creation of this phenomenon? I am concerned that depressions or sinkholes will pose a significant risk to the integrity of a pipeline which is being laid across undulating ground. If a sinkhole of a particular size gave rise to the pipeline being fractured, we would then be in serious trouble. Who is responsible for establishing the precise cause of the sinkholes and for ensuring that there will not be consequential or unintended damage as a result of this phenomenon?

I wish to reassure the Deputy that the consolidation we are discussing here was predicted in the environmental impact statement submitted in support of the application to construct the pipeline. It is expected to reinstate itself over a short duration as the TBM process progresses. The Deputy inquired as to whether we are solely dependent on the word of the company. That is not the case. My Department's consultant tunnelling expert from Environ conducted his most recent site visit last week. A draft report on that visit, including his comments with regard to these depressions, will be published on the Department's website. If Deputy Colreavy experiences any difficulty in accessing the draft report online, I will ensure that he obtains a copy. It is important to place on record the fact that the depressions in question appear to have occurred as a result of air releases during the maintenance procedure. Those depressions have, relative to the overall context of the bay, been small and there is no evidence of contamination or any significant environmental harm. There is no foreseeable way that any of the air releases could affect the integrity of the completed tunnel.

I look forward to obtaining the information to which the Minister refers. It is important that information should also be given to the residents because they need to be in a position to understand precisely what is happening. If the Minister could visit the area during the summer recess in order to talk to the people there about their concerns, I am sure they would welcome it.

I am always delighted to visit north Mayo. I assure the residents that there is no danger involved.

Electricity Generation

Thomas Pringle

Question:

3. Deputy Thomas Pringle asked the Minister for Communications, Energy and Natural Resources his plans to tackle the issue of peat fired power stations in the context of the sectoral emissions reduction plan required of his Department; if it is his intention to refocus the industry toward renewables in a specific timeframe as part of the plans; his further plans to review the public service obligation levy in respect of same; and if he will make a statement on the matter. [35699/13]

The public service obligation, PSO, levy has been in place since 2001. It is the overall support mechanism for peat generation for certain conventional means of generation constructed for security of supply purposes and for the development of renewable electricity. The levy is designed to compensate electricity suppliers for the additional costs they incur by purchasing electricity generated by these producers, including the three peat stations in the State. Peat-fired electricity plants are supported because they contribute to security of supply through the use of indigenous fuels. The peat PSO for the Edenderry plant, which is operated by Bord na Móna, expires in 2015, while those for the two ESB operated plants at Lough Ree and west Offaly will expire in 2019. I have no plans to end the PSO for peat in advance of the dates for their expiry under the European Commission approvals which were received in 2001. The role of peat-fired power stations in the transition to a low-carbon economy will be an important consideration in preparing the low-carbon roadmap. Interested parties will have an opportunity to make contributions in this regard. The three plants are covered by the requirements of the EU emissions trading system, ETS. Their operators are responsible for the management of emissions from the plants and the Environmental Protection Agency is responsible for monitoring emissions in all plants covered by the ETS.

The Government aims to achieve 40% of our electricity requirement from renewable sources by 2020. To this end, my Department is currently supporting renewable electricity generation through the renewable energy feed-in tariff, REFIT, schemes. Energy from wind will continue to be the main source of renewable electricity generation in Ireland. Biomass has a contribution to make in reaching our 2020 and low-carbon targets. In February 2012 I opened the renewable energy feed-in tariff for biomass technologies, REFIT 3, which includes incentives for co-firing of up to 30% biomass in the three peat power plants. This will further diversify the sources of electricity on the system and assist with the decarbonisation of our electricity. However, it is a matter for the generation companies involved as to whether they wish to participate in the scheme.

The provisions in the REFIT 3 tariff to which the Minister referred are welcome. Could the PSO relating to the peat-fired stations be used to enable them to be converted to burn biomass materials? While this is a small element of the overall electricity generation system, the peat-fired process gives rise to high carbon emissions. Such emissions could be significantly reduced by means of a move to biomass. The Government should adopt a policy aimed at encouraging the move from peat-fired to biomass generation. In view of the recent announcement that Coillte and Bord na Móna will soon be operating under the same umbrella, it is timely that a move away from peat firing should begin now.

In view of the dates I outlined in respect of the end of the PSO, I agree with the Deputy that it is time that we should begin to consider this matter. I cannot dispute what he says with regard to efficiency, emissions and so on. However, in addition to what I stated in my original answer, the PSO also applies in order to protect employment. Bord na Móna is a major employer in the midlands and it has 1,500 people on its books at present who are involved in harvesting. Last year Bord na Móna experienced its worst harvest since it was founded and only realised 37% of its target in this regard. As of Monday last, it had realised 100% - 4 million tonnes of peat - of its harvesting target for the current year.

Deputy Pringle is seeking to establish where we go from here. We have raised similar questions with the ESB. As I understand it, converting the plants in question to biomass would prove problematic in the case of two out of the three. The difficulties which arise relate to the age of the plants, the technology on site, adaptability etc. However, the matter is being examined.

I am not seeking to have an impact on the employment created by Bord na Móna. However, the staff involved could be utilised in the wood biomass sector and the level of employment could actually increase if Bord na Móna makes the move to which I refer. As Bord na Móna and Coillte come closer together, I hope the opportunities which will arise will be availed of and that the level of employment in the forestry sector will increase. This would also feed in to the changeover to biomass in the area of electricity generation.

I would be happy to examine that matter. Even if we were to return to Europe in order to obtain approval for a new PSO or for an extension of the current one, the indications are that neither of these might be forthcoming. Edenderry is a co-fired station and could certainly be adapted. However, technical constraints apply in respect of the other two stations. The ESB is currently considering the matter.

National Postcode System Establishment

Michael Moynihan

Question:

4. Deputy Michael Moynihan asked the Minister for Communications, Energy and Natural Resources the estimated costs of the rolling out of the national postcode system; if the implementation of the postcode system will have any impact on employment levels in An Post; and if he will make a statement on the matter. [35401/13]

Ireland is the only country in the EU and the OECD that does not have a national postcode and the Government is strongly committed to introducing a national postcode system. The new postcode system will be an important part of national infrastructure.

The procurement process to select a postcode management licence holder to implement a national postcode system has been protracted and is ongoing. Intensive work has taken place on what is an extremely complex national project. The total cost of the postcode system will be determined through the procurement process. Therefore, I cannot give any estimate as to the cost of rolling out a national postcode system at this time.

However, I can say at this stage that the final invitation to tender has already issued. The responses to that invitation will be evaluated by the postcode evaluation team chaired by my Department during August, the end of July is the deadline for the bids. I intend to bring a comprehensive proposal to the Government for approval in September. This proposal will include an evaluation of the technical and operational considerations and will also include the estimated costs of the implementation of the national postcode system.

In relation to the second part of your question, I do not envisage that the implementation of the postcode system will have any impact on employment levels in An Post. The national postcode system will facilitate improved efficiencies and quality improvements in the mails sector and provide a stimulus to mail volumes though improved direct marketing capabilities.

This issue is vitally important. We had a discussion on the post office network yesterday. There is need for fundamental engagement with all of society on the post office network. I am glad the Minister foresees that there will not be any employment issues and I hope that is correct.

Another issue is to get the public to buy into this new system. Often when a change of this magnitude is proposed, the public is sceptical of it. Is it envisaged that there will be an information campaign on this new system?

The Minister said that he should have a report on this by the end of this month and that he will bring it to Cabinet in September. By what date does he envisage the national postcode system will be operational?

What I put formally on the record is correct because apart from efficiency and quality, there are many logistical companies and companies that engage in target marketing certain segments of the population. All of that is likely to generate business for An Post. I do not believe this will be a negative for An Post. It will be a big plus for business because there are segments of business in this digital age that require a national postcode system. There are several Departments such as the Revenue Commissioners, the Department of Agriculture, Food and the Marine, the Department of Social Protection and so on for which this will be a major advantage.

I agree with the Deputy that there will be a necessity for an information campaign. We cannot take the support of the public on this for granted. I was very nervous about switching over to digital television last year but making a hames of a national postcode would put that in the shade. It is a complex proposal and it will have to be handled carefully.

Has any study or report been done, or have there been any discussions within the Department or the sector, on what impact a postcode system would have on the post office network?

There is close discussion on this. I understand the Deputy recently questioned the new chairman of An Post when he was before the relevant Oireachtas committee. An Post is behind this proposal. It acknowledges that as the only country in the OECD that does not have a national postcode system, we have to get on with it. It sees possibilities in it for the generation of business that cannot be done at present under the old system. In circumstances where its core business, the mails business, has been in decline for some years now, it is confident about this proposal and it believes it will help to arrest that trend.

Petroleum and Gas Exploration

Tom Fleming

Question:

5. Deputy Tom Fleming asked the Minister for Communications, Energy and Natural Resources if he will review and revise the royalties and levies agreement that allow supra-normal profits on any future oil and gas finds off our coast as evidence of recent test drillings are very positive and the speculation is that locations of these drills may prove to be most viable and lucrative; if he will provide an update on his Department's recent communications with the oil drilling companies; and if he will make a statement on the matter. [35676/13]

As stated in the Deputy’s question, suggestions of viable, lucrative and supra-normal profit generating finds are speculative. This type of speculation is regrettably inconsistent - I wish it were not - with experience to date.

In over 40 years of exploration there have been four commercial natural gas discoveries in the Irish offshore, namely, the Kinsale, Ballycotton and Seven Heads producing gas fields off the coast of Cork and the Corrib gas field off the coast of North Mayo, which has not been brought ashore yet. There have been no commercial discoveries of oil to date, although one would never think that with some of the commentary.

In 2011 alone the Norwegian authorities approved 11 new oil-gas production facilities. The employment, economic and fiscal dividend from oil and gas that is enjoyed by Norway is the product of nearly 60 years of oil and gas production based on proven prospectivity.

There has been a modest but welcome increase in the level of interest in oil and gas exploration off our coast in recent years, yet the fact remains that the Irish offshore is relatively under-explored and its petroleum potential is largely unproven. Ireland’s focus needs to be on how to encourage an increase in the level of exploration drilling. The Dunquin well, which is being drilled by ExxonMobil on Frontier Exploration Licence 3/04, will be the only well spudded in the Irish offshore in either 2012 or 2013.

Over the years Ireland, along with many other countries, has continually reviewed, adapted and evolved its regulatory and fiscal terms to ensure they remain fit for purpose, and that process will continue. As I stated during the recent debate on the report of the former Joint Committee on Communications, Natural Resources and Agriculture on the subject of offshore oil and gas exploration, my intention is to seek additional independent expert advice, by year end, on what level of fiscal gain is achievable for the people of Ireland, and the mechanisms best suited to produce such a gain.

In a recent study worldwide it was ascertained that Ireland has the second lowest tax in the world - Cameroon has the lowest tax - on royalty benefits to the State. This is alarming because it has also been reckoned that there is the equivalent of 10 billion barrels of oil reserves off our west coast alone. As the Minister said, much of this is non-viable but if we could extract a fraction of those 10 billion barrels, we would be well on the way to our economic and financial situation being in a much better position that it is at present.

The Norwegian experience is noteworthy. It has put in place sufficient rules and regulations to accumulate sizeable profits from the oil exploration companies.

Thank you, Deputy. I will let you back in when the Minister has responded.

A closely related matter is the Shannon LNG project, which has been approved by An Bord Pleanála. I ask the Minister to use his good offices to expedite it. There is procrastination about it. That project is of enormous value to Count Kerry. As we are well aware, from €500 million to €1 billion, in rough figures, has been mentioned in terms of investment by that company. There is a large number of jobs involved. I ask the Minister to intervene with the regulator to ensure that this contentious issue about the interconnection tariffs is sorted out immediately. This matter is a related issue.

I agree with Deputy Fleming about the importance of landing an LNG project for Tarbert. It would be a considerable boost to the local area. Even more importantly, it would be an additional string in this country's energy security bow. As the Deputy knows, the matter is before the High Court at the moment. I hope a decision will be handed down before the courts rise for the summer recess.

I would like to respond briefly to what the Deputy said about the oil and gas situation. I suppose one can prove anything with statistics. I do not know whether there are 10 billion barrels out there. I would settle for much less if we could make a strike between now and Christmas. The problem is that we will not know unless we can increase the level of exploration. We need to do that and we are trying to do so. In other words, we need to fix the fiscal regime at a level that does not frighten off companies that are likely to explore and drill. The Deputy's question referred to Dunquin, for example. When of all that business is finished, there will be very little change out of €200 million. It is extremely costly. Obviously, the State does not have that kind of money.

I hope the Minister will be able to bring good news regarding the Shannon LNG project to Kerry when he arrives in the county for his annual holidays. I presume the Minister and the Ceann Comhairle will be visiting us again this year.

They are taking everyone in Kerry.

I would like to mention some of the figures that are on the record. It is estimated that there are over 1.7 billion barrels in the Providence company's Barryroe field, which is south of the County Cork coast. It appears that 270 million barrels can be pumped in a viable manner. The Minister mentioned the Dunquin field, which is also very promising. These estimated figures are significant when one considers that oil is selling for between $90 and $100 per barrel. The unfortunate position we have inherited is the result of some very rash political decisions that were made in the past. The Minister and the Government are realistic about this. We should act in a step-by-step manner in revisiting this issue. Surely we can find a means of protecting ourselves because we need these important funds for our education, health and welfare systems and to deal with the issues we are facing. We do not have much to fall back on. I think we can retrieve this.

Deputies will recall a certain Taoiseach who used to occupy this seat many years ago. He used to say at this time of the year that the beaches of Kerry were beckoning. I have never met a Kerry Deputy who does not invite everyone to enjoy the highly cherished product that exists in that county. If I get an outcome from the High Court between now and August-----

Call in to Deputy Fleming.

The Minister will have to head for Scartaglin.

I will put it in the boot of the car and deliver it, like another Minister of State used to do with telephones many years ago. Those of us on this side of the House are at least as enthusiastic as Deputy Fleming about the possibility of an oil strike off the Irish offshore. That is the kind of fillip the industry needs. There is a great deal of excitement around at the moment. The Minister of State, Deputy O'Dowd, who is more hands-on in this regard than I am, advises me that eight of the 13 licences have already been converted, which means there will be exploration. It is possible that two more of them will follow suit. We hope one of them is positive. If we are to test Deputy Fleming's theory, we have to get more activity off the Irish offshore.