JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Wednesday, 12 Jul 2006

Irish Offshore Industry: Presentations.

Chairman

Today the joint committee will first review the report of the Irish Offshore Operators Association, IOOA, entitled, Securing our Energy Future — Irish Gas for a Better Tomorrow, and later discuss with Grianan Energy Limited the development of the Irish offshore industry. I welcome Mr. Fergus Cahill, chairman of the Irish Offshore Operators Association, who is accompanied by Mr. Stephen Boldy, managing director, Lansdowne Oil & Gas Limited; Mr. Stephen Carroll, finance director, Providence Resources plc; Mr. Mike Murray, projects and development manager, Marathon Oil Ireland, and Mr. Andy Pyle, managing director, ShellE&P Ireland Limited.

Before inviting Mr. Cahill to make his presentation, I advise members that we will hear a short presentation which will be followed by a question and answer session. They should be aware that mobile phones must be turned off completely and not left in silent mode as calls can interfere with the broadcasting transmission. I draw everybody's attention to the fact that members of the committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee which cannot guarantee any level of privilege to witnesses appearing before it. Furthermore, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I believe Mr. Cahill is familiar with the committee's procedure. I ask that members confine their remarks to what is contained in the report.

Mr. Fergus Cahill

I thank the committee for its kind invitation to discuss our recently issued document and the future of the offshore industry. I do not propose to read the submission forwarded to the committee secretariat a few days ago but to briefly summarise it.

Chairman

Mr. Cahill has won the hearts of committee members.

Mr. Cahill

The first issue that arises is that of security of supply. In this regard, the world has had several warning shots, including in 1973 and 1979, and many others since. However, we are now reaching a turning point. It is generally considered that we have reached our peak in terms of oil production. At a minimum, it is increasingly clear that all the easy large deposits have been discovered. One will note from press reports that this issue is high on the agenda for the forthcoming G8 seminar in St. Petersburg.

We fully support the recommendations made in the joint committee's seventh report. However, we ask that it recognise that measures such as the use of alternative fuels or renewables are, to a certain extent, limited in their effect for the reasons set out in our paper. Similarly, liquefied natural gas, although it makes an important contribution, remains an import. The ultimate security lies in our own resources produced under our own control, for which there is no substitute. In the circumstances it is of crucial importance that exploration for indigenous oil and gas is encouraged and supported.

In this context, we note and thank the committed for its support for the development of the Corrib field. In the absence of further discoveries, this will only provide temporary relief. The graph on page 3 of our document shows that in the absence of further discoveries, we will be back in the same position as today by 2013 or 2014, importing a similar proportion of our gas. We were somewhat puzzled that there was no reference in the committee's report to the necessity to go beyond Corrib and encourage further exploration and development.

In addition to security of supply, there are considerable other benefits, for example, price. People frequently perceive the way in which gas or oil is sold as the market price, which is correct, but it is only part of the story. What we pay for our gas currently is market price plus import costs and the cost of transporting the gas into Ireland. If, on the other hand, we find so much gas that we are in the happy position of exporting it, the margin a producer here will get is market price less the cost of transporting it. Therefore, some large finds would tend to depress the price in the local market. A simple analogy is if a farmer was selling cattle at a fair and there were more buyers than sellers, the price would go up, but if there were more sellers than buyers, the price would go down. It is exactly the same in the oil and gas market.

Gas will bring growth opportunities. We only have to look at what has happened in Cork in terms of process industry to see what can be done. We have no doubt that the new north-west gas pipeline being built by Bord Gáis will bring similar opportunities and prosperity to the north-western area. We also note the recommendation of the joint committee in this regard.

The industry spends a great deal of money. It has spent in excess of €2 billion at current values exploring offshore Ireland and we have a specific policy of affording full and fair opportunity to Irish suppliers of goods and services. We work with FÁS to maximise employment opportunities. I have just returned from the Fish Ireland exhibition in Killybegs. Five or six years ago, anybody going to Killybegs to the Fish Ireland exhibition would have had to park one or two miles out the road and walk into town. This year people could drive into Killybegs and park on the Diamond because, for practical purposes, fishing is dead. There are 15 or 16 big modern trawlers tied up in Killybegs and they will remain tied up until October. It is the work related to servicing offshore operations that is keeping Killybegs going, as can be seen clearly and as is acknowledged by everybody there.

In Cork, Marathon has a big spend. Lansdowne Oil & Gas, formerly Ramco, spent approximately €14 million developing the Seven Heads field which provided much employment. During construction the Corrib project will generate in excess of 700 jobs in the north Mayo area and provide at least 50 skilled long-term jobs. This is the good news.

The difficult side is that Ireland remains a high risk area of operation. Geology is a problem. We have drilled in the order of 150 exploration and appraisal wells to make four commercial finds, which is a poor record by international standards. Wood MacKenzie, which is based in Edinburgh and is probably the foremost international petroleum consultant in this part of the world, placed Ireland at 49th out of 57 countries it reviewed for success in exploration. Exploration is also a high cost environment. I have listed the factors that make it high cost. Wood MacKenzie lists Ireland as 51 out of 57 in terms of cost.

From the point of view of risk and cost, exploration is a difficult area and this is reflected in the number of companies which are active offshore Ireland. In 1998 our organisation had 16 members. We fell as low as six about two years ago, but now we are up to eight. The recent Rockall licensing round attracted only two applicants. While there was some improvement in the Slyne-Erris round, similar rounds in Norway attracted 44 and 99 applicants respectively. Of the eight licences which were issued in 1995, all have been surrendered and of the 11 licences issued in 1997, ten have been returned.

The Kinsale Head field was discovered in 1972 and we had to wait 24 years before we made another significant discovery, namely, Corrib in 1996. Now, another ten years later we have not yet made a further discovery, with the exception of the small Seven Heads field. Therefore, it is not surprising that a degree of pessimism has developed, but we remain optimistic. There have been numerous shows of oil and gas, technology is improving, petroleum prices seem set to stay at current levels and our members are working hard to try and persuade companies to commit exploration funds. We acknowledge the work which has been done by the petroleum affairs division of the Department of Communications, Marine and Natural Resources in trying to market exploration offshore Ireland and we acknowledge the support of the Minister, Deputy Noel Dempsey, not least in launching our document in recent weeks. These factors have led to some renewal of interest in areas which were previously considered less attractive and have increased the probability of further commercial discoveries. While some caution is necessary, undue pessimism is not.

Having regard to all of the foregoing, we invite the joint committee to recognise the validity of the current policy of encouraging exploration offshore Ireland.

Chairman

I thank Mr. Cahill for his presentation and kind remarks about our report which took two years to complete. A number of stakeholders appeared before the committee, but we did not have the pleasure of meeting the IOOA prior to publication of the report. The good thing about an Oireachtas report is that it can be revisited at any time and any further recommendations the committee feels important can be added to it. We take on board Mr. Cahill's point about offshore exploration.

Deputy Durkan

I thank Mr. Cahill and the delegation for attending the committee and setting out the picture as they see it. We are all of one mind with regard to the need for exploration and to ensure the product is brought to the benefit of the consumer as quickly as possible. Our economy depends on this.

Most of our colleagues agree that we must encourage the entrepreneurial urge and spirit of those involved in exploration. We must provide assurance that exploration will be encouraged and incentives will be awarded to ensure exploration continues. However, there must be some balance between the level of incentive and the dividend eventually accruing to the explorer. It must be borne in mind that the cost of the product, whether oil or gas, must bear some relationship to the incentives provided initially and should not be all one-sided. We live in a consumer society and our object is to satisfy our customers. Whether industrial or domestic customers, it is important that we develop both. It would be to our disadvantage and that of those involved in exploration and in the maintaining of the energy grid if we did otherwise.

Many have raised questions about the licensing and exploration regime and the degree to which the taxpayer, for want of a better description, was not seen to avail of the maximum benefits from it. We realise there are two sides to that argument and there must be a balance. When it comes to exploration we cannot scare everybody out of the country by having such a rigid regime that nobody would wish to become involved.

The Corrib gas field was discovered in 1996. That is a long time ago but it is still not available to the general public. I accept that all the fault does not lie on one side. However, if we wish to galvanise the general public and have them on our side, there must be, within a reasonable time, visible, tangible evidence that this system is working to the benefit of everybody.

In any future regime involving oil or gas either offshore or onshore, it is important there is some kind of layout that the industrial, commercial or domestic consumer in that region will recognise the benefits and the community dividend. They should be able to see pick-up points or a pipeline and a local supply. The people must be brought with us. I do not wish to criticise anybody but it is a simple issue of doing it. If we fail to do it, we will be regarded negatively by both the consumer and the explorer.

The exploration regime needs to be extended further by using more modern technology. In the past ten or 15 years, not just as a result of becoming the Fine Gael spokesperson on this area, I have constantly tabled questions on oil and gas exploration and other mineral exploration both onshore and offshore, which requires development and commitment. At the mere mention of peak oil, the price of oil and gas immediately rises everywhere. We should concentrate on the energy that exists and take it out of the ground or out of the sea while using every means at our disposal to promote the alternatives. Everybody must be prepared to compete in that marketplace.

Chairman

I will take other questions and ask Mr. Cahill to share them among the delegation.

Deputy Broughan

I welcome the delegates and thank them for their briefing and the report, Securing Our Energy Future — Irish Gas for a Better Tomorrow, a thoughtful and informative work which was recently presented to the Minister, Deputy Noel Dempsey.

I wish to ask each member of the delegation a question. Mr. Pyle has visited this committee many times in the past two or three years on the issue of the Corrib gas field. All our constituents desperately wish to know when the gas from the Corrib field will start flowing and what the current position is on the mediation effort. The great Peter Cassells has been in charge of the mediation process for many months. We know from our contacts with the group, Shell to Sea, that they seem to be still desperately unhappy with the plan to bring the gas ashore. At the height of the crisis and afterwards, Mr. Pyle apologised to the people of Rossport for the trauma they endured and for the 94 days the Rossport five spent in jail. I refer to a letter sent by Mr. Pyle to me and the other spokespersons that he had changed his mind about the methods to bring this vital gas ashore. We all recognise that the gas is our window of opportunity to get into renewable energy which it is hoped will be the future mainstay of this country's energy. Mr. Cahill has stated this on numerous occasions. We desperately need Mr. Pyle, Shell and also Statoil and Marathon to be able to deliver for the country.

When will this dispute be resolved? This time last year we were in the middle of the crisis. However, there is still great unhappiness in County Mayo. There will be a fundraising event for the Rossport committee in Dublin this week. Has Shell done enough to ensure resolution of the dispute?

Mr. Carroll always gives this committee the poor mouth, by saying it is proving very difficult to extract the gas and oil and that there may be nothing there. However, this afternoon in my constituency I paid €1.19 for my litre of petrol. It is probably the same price across the country, from here to Rossport or to the Beara Peninsula. The oil companies make massive profits. Exxon Mobil posted a quarterly return of €10 billion for the first quarter of this year. BP, Chevron, Conoco Philips and Shell have all done extremely well but we always seem to hear the poor mouth. Providence Resources plc seems to be a light in the darkness. Mr. Gavin O'Reilly gave very hopeful reports about the work of Providence and Sosina exploration in the Dunquin prospect. It is obvious a deal has been done with Exxon Mobil. Mr. O'Reilly stated they would be able to bring home from that resource approximately 25 trillion cubic feet of recoverable natural gas and more than 4 million barrels of oil. This seems to belie the negative spin which Mr. Carroll has put on our prospects. Providence seems to be making vigorous efforts to bring forward that exploration. I ask Mr. Carroll to address this issue. These seem to be very positive reports.

Mr. Cahill, Mr. Murray and Mr. Boldy referred to St. Petersburg and the security issue. The situation is referred to in a newspaper where it is characterised as a very robust and large Russian bear sitting at the top of the table, delighted with itself. Russia is back in town and a potential superpower due to its massive gas resources. Is the situation still on a knife edge, in the view of the delegation? It seems to be very insecure. I refer to reports of Ukranian crises. I ask all three gentlemen for their views on the licensing regime to which my colleague has referred. There seems to be much interest in the Slyne Erris prospect and there has been hopeful news from Providence. In reply to parliamentary questions, the Minister stated he will reconsider licensing terms and conditions. I assume this is to ensure a greater return for the Irish people and perhaps a more proactive role for the nation on the issue of exploration and PAD, the petroleum affairs division, which the delegation praised. The NORA Bill is being dealt with by the committee.

Did the delegates make a submission to the Minister for Communications, Marine and Natural Resources on the review of licensing terms? Has there been an indication of when a review will be completed and if it will be in time to include provisions in the 2007 budget? After the representatives of the Irish Offshore Operators Association leave, the committee will receive a delegation from Donegal company, Grianan Energy, which has committed in respect of the Slyne-Erris project to give the nation 10% of net profits. Is that a reasonable return for Ireland given the current corporation tax rate of only 25%? Does the IOOA predict any changes in this field given the more positive outlook for exploration this year?

I thank the delegation for attending and providing the committee with an opportunity to debate these key issues. We agree with the tenor of the IOOA's report and the summary which Mr. Cahill provided today on the importance of what the association's members are doing for Ireland and its people.

Deputy Ferris

I thank the IOOA for its presentation and welcome the attendance of its representatives. I had the benefit in one period in my life of working offshore. I worked on the Porcupine Basin in 1978, 1980 and 1981 where I saw first hand how discoveries made were deemed unprofitable due to the depth of water in which we were working. Wells at 1,600 feet were capped and left there. I worked on four different wells in which there were discoveries of gas and oil, albeit in minuscule amounts in some in comparison with others.

Despite the belated apology for the imprisonment of the Rossport five, it was despicable and disgraceful that a multinational company would——

Deputy F. O’Malley

Chairman, that is not fair. It was not the company which put the people in prison. It is not fair or appropriate for a member to make such an allegation against a company.

Deputy Ferris

I did not interrupt the Deputy. I wish to record the point.

Chairman

The Deputy knows the rules of the committee as well as I do.

Deputy Ferris

Yes, but I wish to record the point.

Chairman

We are not to refer to such issues. We are dealing with the Irish Offshore Operators Association. If we want to deal with Shell, we can invite the company to appear before us separately.

Deputy Ferris

One of the delegates present apologised for the imprisonment, which was referred to by the previous speaker.

Chairman

I know what Deputy Broughan said, but I ask Deputy Ferris to be careful in the language he uses.

Deputy Ferris

I will put it another way. It took the imprisonment of people to expose the safety issues which existed and were exposed in the reports which were produced as a result of their imprisonment. Were it not for those people being imprisoned, the procedures would have continued with inadequate safety provisions in place. I hope that is not too difficult for Deputy Fiona O'Malley to contend with.

Chairman

The visiting delegation should note that every member of the committee subscribes to recommendation No. 4 in our report. There was no dissension on it. It is the position of the joint committee, though members may have individual points to make.

Deputy Ferris

I have recorded my position.

Given current instability in world resources, especially on foot of events in the Middle East, the intention to carry out further exploration to establish security of supply is commendable and I support it fully. I have difficulties with the exploration and exploitation of Irish resources where the net benefits do not revert to the Irish people per se. An Irish worker who wishes to get on a rig undertaking exploration in Irish waters must leave the jurisdiction and travel to it from outside. The worker cannot be employed directly from Ireland, which is in complete contrast to the way the industry operated in the 1970s and 1980s. As a member of the offshore oil workers committee, I have attended meetings with various oil companies and am aware that the reason for this requirement of workers to leave the jurisdiction is to prevent the unionisation of oil rigs. What is the IOOA’s position on this? Does it agree that people working in offshore exploration are entitled to be unionised or does it support the current status quo which requires Irish workers to leave the jurisdiction to return to and work in Irish waters to explore Irish resources?

The Minister, Deputy Noel Dempsey, told the committee that if a discovery was made, he would renegotiate if he thought it would be beneficial to the Irish people to do so at that point. Can a licensing agreement and contract be broken in the event of a discovery, or would it continue to stand as currently constituted?

I was in Killybegs last Saturday where I saw the supply ships which service rigs off the coast and further afield. While I welcome the presence of the ships which provide labour onshore for Irish workers, I was told they were there with the proviso that any industrial action or an attempt to renegotiate terms would lead to the removal of the enterprise from Killybegs to Ayr in Scotland. If that is true, people who feel they have a grievance and wish to take the necessary industrial action are, in effect, blackmailed from doing so. I would like the IOOA to clarify if this is the case.

Chairman

Before Mr. Cahill and his colleagues reply, I remind them that while members of the committee have absolute privilege, witnesses do not. Any member can say what he or she likes and will not be prosecuted outside the Houses, but our visitors do not, unfortunately, have the same privilege.

Mr. Andy Pyle

Perhaps I can answer Deputy Broughan's question about the Corrib field. I would like to be able to tell him when work will restart on the project, which we agreed to suspend over a year ago to allow the independent safety review, which the Minister, Deputy Noel Dempsey, initiated, to be conducted. I am pleased the report has been published and confirmed that the design of the pipeline was safe, while adding recommendations to further improve safety, which we have wholeheartedly accepted and will implement. A second reason for the suspension was to allow the mediation process chaired by Mr. Peter Cassells to take place. I cannot comment on specific progress in the process as parties are obliged to observe confidentiality, but mediation is continuing. We are very anxious to restart work as soon as possible.

As Deputy Durkan said, the Corrib field was discovered in 1996 and when the project was approved by our predecessors, Enterprise Oil, the first gas was expected to have been produced in 2003. It is now 2006 and still some way from the first date of production. This circumstance has had a significant economic impact on Shell as the developer as well as on the country as a whole in delayed production and increased costs. I do not know when we will restart but we are working as hard as we can. We are attempting to work with the community and through the mediation process to find a solution that is acceptable to all parties such that the project can restart.

Deputy Broughan

On that point, Mr. Pyle indicated he was prepared to rethink everything. In other words, he was suggesting there was nothing that would not be rethought in the context of delivery to the households of Connacht, including Mayo. Does he still hold by this?

Mr. Pyle

Yes, we said we would consider all the alternatives. Obviously the development option was selected by considering a number of criteria, including safety, environmental, economic and technical criteria. We said we are prepared to consider any alternative that remains a viable development option. Some alternatives suggested are just not viable and we do not envisage the project developing along those lines. We stand by our statement that we would consider all alternatives. If viable alternative options can be identified, we will certainly consider them.

Mr. Cahill

Mr. Carroll from Providence Resources plc will comment on the point made by Deputy Broughan.

Mr. Stephen Carroll

On the Dunquin prospect, we obviously welcome Exxon Mobil, which has recently become a partner with Providence and Sosina Exploration. Providence and its predecessor companies have been involved in Irish oil and gas exploration for some 25 years but, as yet, there has been no return to shareholders. However, we have considerable hope for the future and the Dunquin prospect and our partnership with Exxon Mobil is a positive development.

Our programme is to conduct a seismic survey on Dunquin this summer and, I hope, follow it with an analysis and review of the data with a view to making decisions on drilling. It is a prospect of substantial potential and considerable size. However, it remains undrilled and until significant investment is made in the first well, we will not know what is available in terms of recoverable reserves.

Deputy Broughan

Mr. Carroll may be eulogising it too much. We read at one stage that the reserve would supply a large part of the western European Union, not just Ireland.

Mr. Carroll

Some of the comment on Dunquin may not be directly attributable to our company. There have been some speculative comments but the prospect has been identified seismically and the reserve is believed to be present. Whether it contains recoverable hydrocarbons, or hydrocarbons at all, remains to be seen.

Chairman

I remind members that the purpose of this meeting is to review the report on securing our energy future and to discuss the development of the Irish offshore industry. Can we focus on these issues?

Mr. Cahill

The other questions related to the fact that the industry is accused of having a poor mouth. In fact, circumstances are not as bad as alleged. We try not to put on the poor mouth for the very simple reason that all companies in Ireland, be they small independent ones or major ones, must compete for exploration funds with other companies abroad. If we put on the poor mouth too much, this would not work. We try to maintain a balance regarding the risk to reward ratio.

Ireland is frequently compared with Norway in terms of its take, yet there are only five applications for the existing round. In the same round in Norway some months ago, there were 44. There are two reasons for this. First, an existing producer in Norway receives tax relief on unsuccessful exploration. The total Norwegian tax take is in the region of 75% and this means that if a company gets tax relief on an unsuccessful well, the Norwegian Government effectively pays 75% of it. If one allies this to the fact that the success rate of drilling in Norway is approximately six times greater than in Ireland, one begins to develop a perspective on the risk.

The perception of risk drives the allocation of exploration funds. In other words, exploration directors will say they can risk €1 million or €2 million of the €100 million they have to spend on Ireland but that if they spend €40 million or €50 million in Norway, the risk will be much lower because the Government in that country will return 75% of the moneys if the project is unsuccessful. The directors will argue that their chances of finding a viable reserve are much higher in Norway. We try not to put on the poor mouth but at the same time we must realise exactly where we stand.

Deputy Ferris raised the issue of Irish workers and I take his point about the 1970s. In my previous work for the IIRS, I was instrumental in employing large numbers of Irish workers on rigs. Circumstances have now changed. The safety standards of the industry are much more homogeneous than they used to be and it is now probably impossible for Irish workers to obtain safety certificates. They must go to some place such as Aberdeen to do their training. I would like to see this change.

Nowadays drilling is almost universally done by drilling contractors, which employ their own staff. If they have a team on a rig which comes to Irish waters to drill a well and then goes to the North Sea for another six weeks, they retain the same staff. Notwithstanding this, in 2003 and 2004 we advertised, with FÁS, for Irish workers to be placed on rigs on a long-term basis. The answer is to give people long-term career opportunities rather than six weeks of casual work during the summer and nothing for the rest of the year. We were quite successful in recruiting people to rigs and supply boats and we hope to continue this scheme.

I am not aware of the developments at Killybegs mentioned by Deputy Ferris.

Mr. Pyle

Let me comment because I was rather concerned about Deputy Ferris's comment. We are one of the major operators working through Killybegs and the support we received in the town over the years has been excellent. The last thing we would want to do is move out of the area. I can state categorically, to the best of my knowledge, that absolutely no pressure has been put on people regarding union action or threats in respect of problems. This would not be in line with any of our business principles or those of our colleagues. What the Deputy has alleged is certainly not the case as far as I can say and we would certainly not subscribe to it.

Deputy Ferris

I have one comment on safety courses. I did the safety course in Cork six or seven years ago and understand one can do an updated version in Scotland. There are a couple of hundred experienced oil rig workers in this country who worked off the Irish coast but who cannot get a job. They must go out of the country and join a rig to come back in, even though many of them have ten to 14 years of experience. This is an anomaly and it appears to me, as a member of the offshore oil workers' committee, that there is discrimination against Irish workers. I get the impression that it is to prevent the unionisation of the rigs.

Chairman

Has Mr. Cahill explored the idea of running any of the safety courses at the National Maritime College of Ireland? It is a wonderful facility.

Mr. Mike Murray

I have some experience of the National Maritime College. A private company ran courses in Cork some years ago but unfortunately that folded for lack of demand. The National Maritime College has a facility which has held discussions with industry bodies about getting its course certified so that it can train people which is a positive development.

Chairman

Is it under way?

Mr. Murray

The discussions are ongoing. The National Maritime College has been opened.

Chairman

We are delighted to hear that. It will be helpful to the committee.

Deputy F. O’Malley

I thank the delegation for coming. In my enthusiasm for its title and for alternative energy I assumed it would have offshore wind farms but I see it concentrates on oil and gas. Does it have much conflict with offshore wind energy operations? We have made only limited provision and in future we will have more and bigger offshore wind farms. How does the association see itself working with them or does it operate further offshore? There will in time be deep sea offshore wind farms.

I was interested in Mr. Cahill's comment on tax relief in Norway. What could the Government do to facilitate exploration? Given the geology of Norway the risk entailed in drilling there is greater than it is here. If the Government were to produce something similar to the Norwegian scheme it would be a licence for all the operators to go out and check around with no great return for the Government because the success rate of drilling has been so low. We need to find a happy medium by developing an indigenous oil and gas industry. We welcome the Corrib development because commercial opportunities have been secured or found but we cannot afford to return a 75% tax relief to developers.

Will the Planning and Development (Strategic Infrastructure) Act help to streamline the planning process? Is the planning process an obstacle to exploration? It is in the Government's interest to develop an indigenous industry.

Mr. Murray

The Deputy is right to say the IOOA represents oil and gas exploration companies. There is no reason it cannot live with wind farms. In some more mature areas such as the North Sea where there is already a significant oil and gas infrastructure, some companies have considered reusing that infrastructure to support wind farms and so on. It is a reflection of the point Mr. Cahill made about the low level of exploration and development in Ireland that there are few offshore installations.

As Ireland's exploration moves offshore a high proportion of the development will be in deep water, such as Corrib, or deeper and involve underwater installations which is not compatible with wind farms. It would not be economical because the technology does not exist to support wind farms at that depth.

Deputy F. O’Malley

We are arriving at that point.

Mr. Murray

A major step change in technology is needed to put a wind farm in 500 m or 1,000 m of water off the west coast such as Providence is considering. The environmental conditions there are severe and we are some years from developing technology for wind farms in that situation.

Mr. Stephen Boldy

In the United Kingdom where there are many wind farms they are generally in less than 100 ft. of water whereas most of our activity is at more than 300 ft. There are few areas of overlap. In the east Irish Sea, around Morecombe Bay, many wind farms have been installed where there are already gas producing platforms. One of the development projects is a co-generator for gas and a wind farm. When the wind blows the generator is powered by the wind turbines and when the wind dies down it switches to gas so it continuously generates electricity with an alternative power supply. There is synergy but in shallow water. There are several applications for wind farms in the southern United Kingdom at a depth of less than 100 ft.

Mr. Cahill

Norwegians have the advantage of having vast production. Norway is the third largest exporter of crude oil in the world. Most of the companies operating there have production already on which they get tax relief. The Norwegian Government forgoes the tax. The problem here is that nobody produces anything apart from Marathon, operating under pre-1982 terms. That is a completely different situation. I am sure Marathon will be happy to operate under the 1992 terms.

Deputy Broughan

Is Marathon operating under what we call the Ray Burke or the Justin Keating terms?

Mr. Murray

No, since the acquisition of Ramco's interest in Seven Heads we operate several fields under different regimes. The original Marathon regime goes back to the 1960s. The more recently developed fields are under the 1992 terms.

Deputy Broughan

The 1960 Act remains the basic Act, although it is 46 years old. Marathon could address whether this House should be prepared to update and reconsider the licensing issues.

Mr. Murray

The oil and gas business is no different from any other business such as electronics or pharmaceuticals. Companies base investment decisions on several factors. Whether they invest in Ireland does not depend only on the licensing and tax regimes. It depends on the political regime, the availability of skilled labour, the planning laws and the potential development scenario, and the cost base.

This is a complex issue and Ireland is probably struggling to get investment funds. This is a high cost area compared with other parts of Europe where there is a higher chance of finding oil and gas.

Deputy Broughan

What should the State do to encourage exploration?

Mr. Cahill

We believe the current policy should be continued. We see tremendously encouraging efforts by the petroleum affairs division of the Department to promote acreage. This is a competitive market and one has to sell it. One has to go to the international conferences in the United States and Canada where the main exploration companies are and sell it to them. That is what the division is doing and that is why we are seeing an increase in interest. We support the current policy and urge it to be maintained.

Deputy Finneran

Since I am a substitute member of the committee, I appreciate the Chairman allowing me to contribute. I compliment the committee on its report on energy resources.

Chairman

Thank you. We are still waiting for others in higher positions than the Deputy to compliment the committee's report.

Deputy Durkan

Does this relate to events last Sunday?

Deputy Finneran

It may be the catalyst.

During my political career, a debate has gone on about our energy resources. It is based more on ideology than a practical approach and is not good for the country. If we had followed the ideological approach, our peat resources would never have been developed, we would still be travelling by donkey and cart and not be a member of the European Union. There is still such thinking in the debate on our energy resources.

Deputy Broughan

May I remind the Deputy that it was the State that developed our peat resources?

Deputy Finneran

The most recent power station developments, Lough Ree at Lanesboro and Shannonbridge in west Offaly, were the subject of an objection from a political party. We are well aware of the difficulties posed by an ideological perspective in developing our natural resources.

I support the development of our natural resources. However, in recent years we have not done enough to develop our offshore resources. If we were doing it right, we would have had better progress. Since 1985, 11 offshore exploration licences have been surrendered and some even handed back. In the recent rounds Norway and the United Kingdom attracted 44 out of 49 applications, yet Ireland attracted only two. What is laid out for the exploration of our offshore energy resources is not successful. As parliamentarians, it is important we learn how to succeed from delegations such as this. This will be in the best interests of the country and its citizens.

We are conscious of the worldwide price for oil and gas and their availability to a peripheral island like Ireland. I agree with Deputy Fiona O'Malley that the prospect of Ireland providing a 75% return on exploration in the event of a drilling test not being successful is not possible. I am sure, however, there are alternatives. The delegation responded in some way to Deputy Fiona O'Malley's questions. Will it outline the alternatives in more detail? As bringing these resources onshore is both difficult and costly, it is up to the State to set the framework in place to assist. The IOOA is in a good position to advise. The Government does not have to accept it but it can avail of the expertise it shows. As a parliamentarian, I am keen on what it has to say on how we can progress from this standstill position. There have only been two successful explorations in 30 years and no great prospects. I appreciate the point made by Mr. Carroll. Will Mr. Cahill expand on his points?

Chairman

We will hear from one last speaker, Deputy Durkan. I welcome Deputy McGinley, from Killybegs, who is substituting for the committee Vice Chairman, Deputy Perry. Mr. Cahill spoke highly of Killybegs. I hope we will not see a large oil exploration town there, resulting in the fishing fleet having to move to Castletownbere.

With the committee's permission, I wish to hand the Chair over to Deputy Broughan later in the proceedings as I must attend a party policy meeting.

Deputy Durkan

The Chair should take it easy and not let it rush to his head.

Deputy Broughan

I hope the Chairman will bring the committee's feelings to the Fianna Fáil parliamentary party.

Deputy Durkan

The Chairman should not be subsumed at the meeting.

Chairman

I must submit my relevant documents at 2.30 p.m. to that meeting and need to go over it.

Deputy Durkan

Mr. Cahill claims it is advisable to continue with the current exploration regime. I am not so sure, however, it is achieving the desired results. I understand the background in that offshore exploration in Ireland is more difficult and we do not have the same results as Norway. The Minister for Communications, Marine and Natural Resources has indicated on more than one occasion that he is willing to review the regime. Provision should be made for it to be reviewed on a regular basis, taking into account the degrees of success and expenditure undertaken by a particular exploration company. That is how most leases work. There has to be some regard for the profit being made on an ongoing basis. This is how the regime should work.

We do not want a situation like that in "The Spoilers" with John Wayne striking gold in the Yukon so easily. Theoretically, an exploration company could get lucky quickly while another, operating under the same regime, spends much money and time in exploration with little return. Can the exploration leases be incentivised further, without a loss to the State or the exploration companies?

Deputy Broughan

Deputy Finneran is a pleasant and hard working colleague. However, I remind him that in the past 20 years his party has been in power for all but two and a half years. Since 1960, when the Act under which we operate was passed, his party has been in power for 36 out of 46 years.

Deputy F. O’Malley

This is——

Deputy Broughan

The point is that if one bemoans regimes——

Deputy Finneran

One Minister from my party resigned over——

Chairman

Perhaps the Deputy might ask a question.

Deputy Broughan

The Government had ample time. Perhaps at this point next year, when new colleagues will have an opportunity to work with the industry, we might be able to produce some incentives to move matters along. This year has been a great deal more hopeful regarding Slyne-Erris in particular, and young Irish companies are beginning to come forward. I welcome what Providence Resources plc, Lansdowne Oil & Gas Limited and other companies have done. It is beginning to create a much more hopeful atmosphere.

However, is the bottom line not that it has all been a matter of cost? Is that what Mr. Cahill is saying? Hitherto, the cost of drilling in Irish water has been the fundamental problem with which we have had to cope. However, the price of oil is now $74 a barrel and rising. People on Wall Street look forward to an economy in which oil costs $200 a barrel. Turning again to our colleague from Providence Resources plc, given those circumstances, does our hydrocarbon geology not begin to look seriously attractive? In that context, is it not fair to have a review?

My party published the Petroleum and Other Minerals Development Bill 2005 which essentially sought to allow public discussion of the licensing regime in Dáil Éireann at intervals of six years. Would Mr. Cahill be happy to have such regular public discussion? He said he would like the situation to remain exactly as it is. Has he made that point to the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey?

Chairman

When Mr. Cahill responds, perhaps he might have regard to the licensing terms for offshore oil and gas exploration and development of 1992. Is it time to review them? Perhaps his organisation might consider making a submission to this committee more detailed than the document that it supplied today. It would be very helpful to us and those who come after May next year.

Mr. Cahill

In the first instance, the fiscal regime is absolutely a matter for the Government. It is primarily up to the Government to determine how it is structured and applied to achieve the appropriate risk-reward balance mentioned by Deputy Durkan between the interests of the exploring companies and those of the State. The issue of whether oil costs $30 or $75 a barrel has a bearing on that, but it is not great if one is not finding anything. I do not know how many members are, like me, old enough to remember Mr. Joe Holloway, who was Secretary General of the Department of Energy. He was very fond of saying that 25% of nothing was nothing and that 100% of nothing was nothing as well. He also remarked in my presence one day that he could not understand why the Almighty had put all that oil in the UK sector and none in ours, but perhaps we should let that pass.

Deputy Broughan

Does that mean that God is an Englishman?

Mr. Cahill

On the question of reviewing the fiscal regime, I can do no better than reiterate the Department's commercial handbook on the subject which states that its petroleum affairs division regularly reviews those arrangements and reserves the right to amend them for future licence rounds in the light of sector success and terms available elsewhere in the world. That is the reality everywhere.

Chairman

Thank you, Mr. Cahill. We have found today's discussion very informative. I thank everyone for attending. We look forward to engaging with the delegates again, and if they wish to submit any further documents for the committee's consideration, they are more than welcome to do so.

Mr. Cahill

I thank the Chairman and extend the association's thanks to the committee for the courteous reception we have received.

Sitting suspended at 4.15 p.m. and resumed at 4.20 p.m.

Acting Chairman (Deputy Broughan)

I warmly welcome the representatives of Grianan Energy Limited. I believe they have already met several of the spokespersons individually in recent months. I welcome Mr. Martin McConalogue, Mr. Mark Turner, Mr. John McBrearty and Mr. Dermot McErlean.

I advise everyone that there will be a brief presentation which will be followed by a question and answer session. We are hoping to finish shortly before 5 p.m. I again draw everyone's attention to the fact that members of the committee have absolute privilege, but, unfortunately, the same privilege does not apply to those appearing before the committee. We try to use our privilege as diplomatically as we can, but visitors must be aware of this.

Perhaps Mr. McBrearty might begin the presentation.

Mr. Mark Turner

I am speaking on his behalf. I thank the joint committee for the invitation to appear before it. As I pointed out to Deputy McGinley, it was extremely risky for four Donegal men in black suits to drive through the Six Counties on 12 July. Luckily, we are alive.

Grianan Energy Limited was set up initially to take advantage of the Slyne-Erris round. A group of Donegal businessmen who were adequately capitalised decided it was feasible to set up an Irish company to engage in oil and gas exploration. We made an application for the round and interestingly to follow on from the earlier contributors, I do not believe the oil and gas industry requires significant tax incentives in order to do business. If I was successful in any other business and sold it on, I would be required to pay capital gains tax on it. If on the other hand, the business was unsuccessful, I would not expect the State to pay me 40% of what I spent.

The significant difference between our business and the others is that we are solely focused on doing business in Ireland. We are not competing with capital between countries. If one is successful in delivering energy resources to the State, one pays no royalties and 25% tax, which can be deferred and written off against exploration and production costs. Doing business in oil and gas in Ireland is a no-brainer. Investing capital in the oil and gas business is always risky and the fact that so many wells have been drilled which are unsuccessful is no reason not to do business.

Let me give an example of two Irish housewives who set up a company called Belize Natural Energy. Over 50 years the British had drilled wells and found absolutely nothing, but these two Irish housewives backed by gardaí, teachers and capital of only $6 million are successfully pumping commercial quantities of oil. The Government of Belize stepped in because there was no tax regime for petroleum but following negotiations the company is prepared to pay a royalty of 40%. Companies such as British Petroleum were drilling unsuccessfully in Belize for 50 years. The success rate should not be the only factor in determining the tax rates. It is more important to get domestic companies to take the risk, which like us would be willing to repay 10% of gross revenue if successful.

Unemployment in Donegal is four times the national average and the level of business being done through Carrickfinn Airport and through Killybegs Port is equivalent to the business of two or three supermarkets and is not material to the economy of Donegal. If we are granted the licence, our average annual spend on exploration activity would amount to the largest industrial investment in Donegal since the foundation of the State. We would be the only company in the Slyne-Erris round which would have offices and staff in Donegal and in the State.

On a slightly more contentious point, people in Donegal were very surprised that Shell was permitted to enter the Slyne-Erris round while the situation at Rossport remains unresolved. I think a lead could be taken by Ministers and Deputies to limit the companies involved.

We are a Donegal company and what we propose to spend in a ten-year period would be the largest investment made in Donegal.

Acting Chairman

I thank the delegation for its presentation.

Deputy Durkan

I thank the delegation for coming before the committee and wish its members well in their future enterprise. It is great to see entrepreneurial skills, with local people putting their money, reputation and future on the line. The outcome of the exploration is as important to the local entrepreneurs, as it is to Donegal and the country.

It is important that the licensing regime is adaptable to the circumstances. There are benefits for those who carry out exploration for 20 years, but none for those who carry it out for ten years. If unsuccessful, it may well be possible to write off the costs against tax, but after a while it becomes tedious for the backers. Ultimately the licensing regime must reward enterprise, input costs and outlay while at the same time ensuring that the State benefits.

I know that investment is needed in Donegal which has had significant losses in indigenous industry in recent years. My colleague, Deputy McGinley, has pointed this out in the House on several occasion. There is a necessity to find replacement industry. When I was young, I used to read what Mr. Seamus McManus wrote about Donegal which gave me a great insight into life in that part of rural Ireland. At the time Donegal had a higher level of indigenous small industry than other parts of the country but sadly that is no longer the case. I agree with the delegation that the business sector has to show that it has confidence in the area and is prepared to take the risk.

It is an integral part of the legislation that the Minister shall direct and he dictates the pace, if nothing happens the economy pays a high price. In the nature of things, Ministers will take responsibility for all the positives and the regulator will take responsibility for the negatives. Deputies have some influence but ultimately it comes down to what the Minister directs or nothing happens.

Deputy Ferris

I welcome the delegation. It is refreshing that Irish people with a genuine concern for the communities in their county are prepared to put their hands in their pocket and take the necessary risk which they hope will be beneficial for all. I commend them for this. All types of exploration carry significant risk. If we are to believe what we are told, the success rate, particularly in Irish water, has been minimal. I am acutely aware of the situation in Donegal as last week I met fishermen, including the salmon fishermen and the chamber of commerce in Killybegs. Several fish factories have closed in the past two years and people are still out of work or have emigrated. The county is badly in need of an injection of confidence. Grianan Energy Limited can inject that confidence, self-belief and pride. Irish people have come together and are dependent upon the necessary political support to see through the objective that they have set themselves.

Multinationals have one purpose which is profit, irrespective of people. We heard a presentation here about this. I read that workers in Africa who opposed multinationals were hung. It is a tremendous gesture that this company is prepared to put 10% of its profits back into the local economy. I wish the company well. Have the company representatives here today met the Minister? If they have, what kind of response did they get regarding their proposals? The last time I read their proposals, I saw that they were interested in a number of blocks west of Killybegs and were prepared to take them all. They wish to proceed with the exploration and hopefully they will obtain a good result.

I am aware that there is much public support within the community. Is there another agenda at work trying to prevent this development? Have the representatives encountered it? Companies starting up, such as Grianan, can be perceived as a threat to those that control the industry. They would do anything in their power to prevent any type of opposition.

Deputy McGinley

I thank the Acting Chairman for giving me the opportunity to make a brief contribution. I am deputising for Deputy Perry who cannot be here today.

As a Donegal man, I am delighted that there is a group of entrepreneurs based in the county who are willing to develop a project like this for the benefit of the county and the entire country. I do not wish to be too parochial, but Donegal has suffered so much and has lost out on most of the Celtic tiger. The county has four times the national unemployment rate and that is difficult to justify. We have lost about 12,000 industrial jobs in Donegal in the past ten years. Our industrial base has contracted very significantly. Big players such as Fruit of the Loom closed with the loss of 3,000 jobs, and Hospira in Donegal town closed with the loss of around 600 jobs. Very few of these jobs have been replaced. It is good that there are people like the representatives who are prepared to come together with the resources and the expertise to compete in this important area.

In the past, most if not all of these licences have been given to multinationals. I have nothing against multinationals, but they do their own thing and we must do ours. There is a significant advantage in having a locally-based consortium that is willing to compete. It is not looking for any great tax concessions from the State and it is willing to take the risk. The State and Donegal could gain something out of it. We have tremendous facilities there. Deputy Ferris was in Killybegs at the weekend and he could see that we invested about €50 million in the last few years to build a state-of-the-art pier. It is as big as a dozen football fields or more, but there is nothing going on there. The entire fleet — worth over €400 million — is tied up and nobody is working. The people from Glencolumcille to Donegal are working in Dublin and around the country, but they are not working in Donegal. The processing industry is gone and Killybegs is a very depressed place. A facility such as that is ideally located as a base for this sort of exploration.

I live within ten minutes of Carrickfinn Airport, which may not be as big as Kerry Airport but it is important nonetheless. There are flights to Dublin twice daily and it is being used regularly. There are excellent facilities in Donegal, but they are not reaching their full potential. For a local group such as Grianan Energy Limited to get involved in this sector will be of great benefit and is one of the most exciting things to have happened in a long time. We are not dealing with a company that will be here tomorrow and some other part of the world next year. This company will be located in Donegal and is putting its expertise and resources into its development. The pay-off for Donegal will be exceptional if the company is successful. I wish the company the best. I do not know whether it has applied for a licence yet, but if it does, I hope the committee is very supportive of its application.

Acting Chairman

I would like to make a few points on behalf of the Labour Party. I was also in Donegal a few weeks ago to publish our fisheries policy. The feedback I got from our friends in Killybegs was that under this Administration, the fishing industry has effectively collapsed. This has focused minds on what can be done in the last nine months of the Government to try to revive a key component of the life of our coastal communities. That night, I was trying to meet the challenge on behalf of my own party. Like Deputy Ferris, I met many of the interests involved.

Can the representatives set out the steps they have taken to establish the company? What are its basic principles? Why do they think the company is unique? From the last presentation, we all feel that we should learn the lessons from Corrib. We noted that there was no interaction with the locals, no good deal for Mayo or for Connacht. This is why it is welcome that a group of local people are prepared to offer something to Donegal, a county which has been neglected. I remember being on "Prime Time" the night Fruit of the Loom collapsed which was a sad occasion for the communities in north Donegal.

The company applied for the Slyne-Erris licences on 15 March over a number of phases from 2006 to 2021. We understood the decision was to be made in May. What feedback did the company get on this application? Has there been any decision? What do the representatives expect to happen? The awarding of licences must be a fully transparent process and is a key responsibility of the Minister. Nevertheless, people will wish a young Irish company well in this regard.

Mr. Turner referred to multinationals a number of times. What does he consider to be the failings of the legislation of 1960 and 1992, as well as of the various amendments? The Labour Party is proud of the decisions made by my great predecessor, Justin Keating, and the regime which he instituted and which was maintained for a significant amount of time, including throughout the Kinsale period. In other words, I refer to the amendments which govern this area at present, particularly those introduced by the present Taoiseach while he served as Minister for Finance in the Fianna Fáil-Progressive Democrats Government. What results would Mr. Turner like to see coming from the review? I ask the witnesses to address these points as well as those made so eloquently by my colleagues.

Mr. Turner

As for Deputy Ferris's question regarding the blocks for which we applied, we believe all uncontested blocks should be ceded to Grianan Energy Limited, both as an Irish company and one which has a more intelligent and more interesting plan than the other companies. While I will return to the latter point, if such blocks have not been sought by a multinational, they should be ceded to the Irish company.

Grianan Energy Limited has not had contact with the Minister because he has stated numerous times in the newspapers that he cannot be seen to be talking to any of the companies involved. He cannot favour Irish companies over foreign companies, or vice versa. However, the company has formed the opinion that this might not necessarily be the case and that the 1992 legislation, to which I will return, could well have been drafted by a number of multinationals, rather than by the Oireachtas.

The company enjoys enormous public support in County Donegal. However, this popular support is matched by fear of multinationals. I am stopped on the street to discuss Grianan Energy Limited's progress and prospects as often as I am to hear people express the hope that such a crowd will not come and that a Rossport-like scenario will not develop in County Donegal. People are very fearful as to what may happen to the mountains, bogs and beaches.

One reason for our company's better principles and tighter rules on environmentalism is simply that we all live there. I live by the sea in a wee village called Dunfanaghy and if I was to begin to rip up the countryside or to profiteer on the backs of my own people, I would not live there for very long. Having spent most of my life in South America, I returned to Ireland to seek new opportunities at home.

In that context, the company is engaged in discussions with a number of companies in Latin America. The discussions are not limited to the oil and gas industry, as partnerships involving potential spin-offs from it are under consideration. As Deputy McGinley noted with regard to the airport, given the number of helicopter flights which would pass through it, an effort to establish helicopter maintenance facilities to increase the number of jobs for local people would be intelligent.

Although County Cork had gas for 30 years, I do not see the presence of any significant marine engineering business there, apart from that which services the Naval Service. One cannot attend University College Cork to study any subject which is useful to the oil and gas industries. As our company wishes to change this state of affairs in County Donegal, we want to bring on board Magee College in County Derry, as well as Letterkenny Institute of Technology, to work with it to establish courses. Moreover, if the company begins to make some money from this venture, it will be able to help poorer students into such subjects. Hence, we can build our own human capital resources.

While the previous representatives complained there were not enough qualified people in Ireland, Grianan Energy Limited seeks to change this. We seek to change matters to qualify our own people and want to bring other businesses into County Donegal on foot of this development. We want Donegal to become a centre of excellence for all of Ireland, as Cork should have become.

Last Friday's edition of The Economist reported that the United States Government has just begun to open up its eastern and western coasts to oil and gas exploration. However, even that government offers a revenue-sharing system to the offshore parts of the different states regarding anything which may be found. Nothing similar has ever applied here and the Corrib field will not do anything significant for County Mayo. The provision of 50 jobs is equivalent to opening a supermarket. While the jobs in question will be skilled at least, I cannot envisage any other great developments coming to County Mayo on foot of the Corrib gas field. Nothing great came to County Cork on foot of the Kinsale field.

However, this time it is different. Anything which we might get from off the coast of counties Donegal, Mayo or Sligo will go back into those communities in the west of Ireland. As for any profits which we may make, I repeat my earlier comment that it is ridiculous for anyone in the oil and gas industry to talk about subsidies and incentives. At present, there is plenty of risk capital available, particularly in Ireland, which is awash with money. In any country, potential economic returns will attract high risk investors seeking a high return, no matter how high the risk and our business model reflects that. While my colleagues and I also have low risk businesses, this is our high risk business. However, we are willing to take the risk on behalf of the State and the people of County Donegal and if we lose our shirts, so be it. However, we do not ask anything of the Government, other than permission to go out there. We want the blocks and licences and to be able to do our job.

Acting Chairman

On that point, members regularly hear from the Minister in respect of the vast expenditure required. For instance, last week at Question Time he spoke in terms of $20 million and upwards for a single drill. Were Grianan Energy Limited, or any company in its position to be successful, could it raise such capital?

Mr. Turner

I spent 18 years working in South America and this is the first time as a finance director that I have encountered no difficulties in getting money. Money is coming at us from every direction because of the present condition of the global energy market.

I worked in a number of industries in Latin America, including the oil and gas industry. In respect of the 1992 legislation, as oil and gas prices then hovered between $10 and $15 a barrel, perhaps it was a great idea at the time. However, nothing was ever written into the legislation to allow factoring for the present oil and gas prices. The tax regime written into the legislation reflects oil and gas prices which equate to $10 to $15 dollars per barrel and does not reflect the present global market price.

Recently, I read in a report on the Corrib field that if one takes the price of oil at the conservative price of $50 per barrel — I know it is much higher than that — the field would still be worth €8.8 billion to the companies exploiting it. That figure is based on a price of $50 a barrel and nothing will go to County Mayo or to the State. Sadly, Grianan Energy Limited will not be exploiting that particular field. If we had a small similar field, it would still equate to a fund of nearly €900 million for the west of Ireland. Hence, the legislation has a failing in that while one must incentivise when the value of an asset is very low, it is unnecessary when the price is high.

Hence, were I mining for gold at present, given the record gold prices I would not appear before the committee to discuss any kind of incentive or tax relief for gold prospecting. While I might have done so when gold was priced between $100 and $300 per ounce, I would not do so at a time when it is priced at $600 an ounce.

Deputy Durkan

On the centre of excellence, Mr. Turner will be glad to know that Fine Gael's policy, which was produced some time ago, incorporated the idea as a major pillar of the energy industry, along with other policies. It should be linked to third level institutions and information should be fed into them. Essentially, this would deliver and develop the research and development element of the energy sector, which has not been done in Ireland to any great extent.

In one case, a Minister has speculated as to how energy generated by nuclear means could be segregated from other forms of energy before buying it. Instead of speculating about nuclear energy, it would be better to spend some time carrying out realistic research and development which could have an immediate impact on the future needs of the economy, in terms of the energy sector. Hence, the suggestion is synonymous with Fine Gael's policies. The Government has come forward with some policies in this regard recently, although it has yet to come up with its Green Paper on energy. One presumes it will cover the same area, albeit under a different name. This is driven by the fear that energy sources may run out for one reason or another. Nothing concentrates the mind as much as a cold kettle.

Acting Chairman

I will ask some final questions. Is Grianan Energy Limited a member of the Irish Offshore Operators Association?

Mr. Turner

No, the company is still too new. Given our knowledge as to how such matters might work — I do not suggest it did so — we made a stealthy bid. As I noted earlier, on first examining the legislation, I reported to my colleagues that I believed it had been written by one of the multinationals and not by the Oireachtas. Hence, we made a stealthy bid and did not let anyone know that we would do so until five minutes before the deadline. We may join the Irish Offshore Operators Association in future. However, while some aspects of its presentation might be helpful to us, others are not in line with my beliefs and those of my fellow directors.

Acting Chairman

In the light of what Mr. Turner has just said and other issues, particularly those relating to licensing, and Grianan Energy Limited's experience so far, the committee would welcome a submission from him dealing with all these areas. Such a submission would give the committee the opportunity to continue its review into all the areas, possibly in the autumn and early next year.

I congratulate Grianan Energy Limited for what it has achieved so far, what it aims to achieve and its devotion to its native area and Donegal which we have all witnessed when its representatives have visited the Houses of the Oireachtas. We all believe the area in question needs major economic and infrastructural development and wish the company well. The committee must be neutral and transparent in respect of Slyne-Erris and elsewhere, as befits an Oireachtas committee. However, most of us would welcome the involvement of a young Irish company which is putting forward some interesting ideas, which I believe the media has covered quite well in recent months, thereby providing us with a good briefing on the matter. I thank Mr. Turner, Mr. McBrearty, Mr. McErlean and Mr. McConalogue. As a number of speakers have noted, these matters are very important for the nation.

The joint committee adjourned at 4.50 p.m. sine die.