Seanad Éireann debate -
Wednesday, 14 Jul 1982

Vol. 98 No. 10

Gas (Amendment) Bill, 1982: Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Industry and Energy (Mr. A. Reynolds)

I know Members of Seanad Éireann will appreciate the historic significance of this Bill. The Bill will provide the basic financial framework for a new national energy network. It is, perhaps, not an exaggeration to compare the work now in hand in developing our gas grid with the launching of the Shannon Scheme in the late twenties, or Bord na Móna in the thirties. This Bill is an early milestone in the emergence of a great new native energy source and I have no doubt that, in the time ahead, it will substantially benefit our economy and the living standards of our people.

I believe we all appreciate the importance of the Kinsale Head field as a natural resource. The most effective use we can make of that resource is to have it quickly and widely available for use in the premium market which is principally domestic use, and after that, commercial and industrial use. The whole project is a formidable one based on an indigenous resource which can sustain itself. This Bill is necessary to ensure that the money will be available to enable us to get on with the job and to bring the benefits of that resource to our people as quickly as possible.

The purpose of the Bill is to raise from £30 million to £80 million the limitation both on the aggregate borrowing powers of Bord Gáis Éireann for capital purposes and on the aggregate of such borrowings which may be guaranteed by the Minister for Finance.

The current limitation of £30 million is set by sections 23 and 25 of the Gas Act, 1976, as amended by the Gas (Amendment) Act, 1980. Section 23 refers to the aggregate of outstanding borrowings for capital purposes and section 25 relates to outstanding borrowings, other than borrowings out of the Central Fund, which may be guaranteed by the Minister for Finance. To date, the total borrowings of the board amount to approximately £8 million and the amendments now proposed are necessary to enable them to finance the Cork to Dublin natural gas pipeline and other projects.

Bord Gáis Éireann were established in 1976 and undertook, as their first project, to pipe natural gas, which is of very high quality and calorific value, from the Kinsale Head field to the Cork area. This necessitated an onshore pipeline and associated transmission facilities necessary for the distribution of gas to users such as the ESB, NET, Cork Gas Company and other industries in and around Cork. As Senators are aware, this goal was achieved successfully and effectively by the board.

At the time of the decision to proceed to commercial production, the Kinsale Head field reserves were estimated to contain 1 trillion — that is, 1 million million — cubic feet of recoverable gas. This was sufficient to maintain a daily production of about 124 million cubic feet over a 20-year period and the contracted off-take in Cork area was set at this figure in an agreement between BGE and Marathon.

Following experience of actual production from the gas field and review of its characteristics generally, the recoverable reserves have now been formally revised to 1.35 trillion cubic feet — an increase of 35 per cent on the original estimate. This is sufficient to support production of approximately 180 million cubic feet per day over the balance of the 20-year contract period. Current off-take is approximately at this level and is accounted for by an additional allocation of gas to the ESB for 1982 and 1983.

The upwards revaluation of the gas field's reserves by 35 per cent was a major factor in deciding to proceed with extension of the natural gas grid. Another important factor was the report of the Town Gas Review Committee which concluded that there were distinct advantages, both in economic and energy terms, in allocating a maximum proportion of the natural gas resource to the premium markets in the Dublin area and other populated centres, especially those with existing town gas industries. The present Government approved such a policy because of its emphasis on more efficient and economic use of natural gas, savings on imports of premium fuels such as gas oil, revitalisation of the town gas industry and because it will make available to a large sector of the population an indigenous premium fuel. I personally wish to see the natural gas grid extended to as many areas as possible outside Dublin where this can be done economically and efficiently.

Clearly the construction of the Cork to Dublin pipeline is the first priority and will form the backbone of the national gas grid. The contract for the construction of the Cork-Dublin pipeline to Dublin City Gate has been awarded to the Irish-Dutch consortium of Irishenco-Nacap at a cost of £27.4 million. The overall cost of the project is expected not to exceed £45 million. This includes the cost of acquisition of wayleaves, engineering, communications and other related projects not covered by the pipeline construction contract itself. When provision is made for construction of the link from the City Gate, beyond Clondalkin, into Dublin Gas and the ESB, the overall cost of the project is estimated at under £60 million. Contracts for both parts of the link into the city from Brownsbarn to Grove Road on the canal and from there to Dublin Gas and the ESB have just been awarded to the Irish-UK joint venture of Murphy International-Murphy Pipelines. All projects are expected to be completed in time to have Kinsale gas flowing into Dublin by early next year.

Senators will appreciate that the most efficient use that can be made of the Kinsale field is to maximise the availability of gas for the premium domestic market and for use in industry and commerce generally. As I indicated, the displacement of imported premium fuels such as gas oil is a primary aim. The central heating market in houses, offices and factories will be an important area in this strategy. After that we must look to the availability of gas for direct use in industry.

While these markets are being built up, the sale of residual gas to the ESB will contribute quite significantly to the economics of the pipeline and will generate additional substantial revenue for BGE and the Exchequer. Moreover, the availability of gas to the ESB will help to stabilise electricity prices to the consumer and save on oil imports, thus assisting our balance of payments. Current savings on imports from all sales of gas by BGE are running at £200 million and will increase over the next few years as the gas grid is expanded to replace the maximum amount of premium fuels.

It is estimated that the allocation to Dublin Gas alone would reduce our energy import bill during 1983 by about £17 million on present consumption levels. As Dublin Gas are confident that they can expand the market for gas by six to eight times the present level, savings on imports by the end of the decade should be very significant indeed, reaching a level of about £80 million a year in 1982 terms. On the financial side it is the Government's intention that the estimated cost of the entire project, that is, £60 million, should be 30 per cent funded from BGE's own internal resources. This provides a reasonable level of internal funding while ensuring that a substantial proportion of BGE's surplus arising from the sale of gas will accrue to the Exchequer. The remaining 70 per cent of capital investment will be mainly funded by borrowings from the European Investment Bank on terms which are currently being negotiated. This will leave a proportion of borrowings to be raised on the home market in a manner still to be determined.

I said earlier that our primary objective is to bring gas to Dublin. This is as it should be. An improved gas supply to the existing market in Dublin and the availability of Kinsale gas at competitive prices to new customers will ensure that the premium market is exploited quickly and efficiently. Because of this I was pleased to be able to announce recently that agreement had been reached between Bord Gáis Éireann and the Dublin Gas Company on the main provisions of a contract for the supply of gas. This will clear the way for Dublin Gas to receive supplies from Kinsale in January next year. But, as I also said, we must cast our sights beyond Dublin. I am anxious that other towns should have Kinsale gas. I am particularly concerned that existing town gas companies should be given the opportunity to get Kinsale gas where practicable. Town gas companies such as Limerick, Clonmel and Waterford either have had consultancy studies carried out or have such studies in progress. In addition, BGE have recently completed preliminary route studies on possible spur lines to Limerick and Waterford and these studies are being considered at present. While I am not now in a position to give a time scale for the completion of this essential planning for the second phase of the development of our natural gas grid, I can assure Senators that it is being progressed as quickly as possible having due regard to all factors involved.

Senators will, of course, be aware that Cork Gas Company are already receiving supplies of natural gas. At present the company are using the gas as a feedstock for the manufacture of town gas. I hope that the company will be in a position to complete their programme of conversion to direct use of natural gas as quickly as possible. I look forward to seeing substantial growth in their volume of sales and simultaneous expansion of their distribution system as natural gas becomes available direct to the consumer. Indeed BGE are now anxious to proceed to the quick conclusion of a contract with the company in order to facilitate these developments. Concrete progress has been made and I hope to see the matter brought to a conclusion shortly.

The extension of the grid has also presented us with a valuable opportunity for positive and worthwhile co-operation with the North of Ireland. I recently met with Mr. Adam Butler, the Minister of State with responsibility for energy matters at the Northern Ireland Office, to discuss a possible supply of natural gas for the North of Ireland. The discussions covered supply schedules, duration of contract, price, price review mechanisms, capital investment and transmission costs.

We reached agreement on the main terms on which gas could be supplied to the North of Ireland and the Minister of State and I have already recommended these to our respective authorities. We should be in a position to deliver gas to Northern Ireland during 1984. This will be a very significant extension of our gas grid and I am confident that the very great benefits to be derived from it will be quickly reflected in our balance of payments.

The whole development programme which I have just outlined will require quite considerable capital expenditure on the part of BGE. As I have explained, this will be met partially from surplus revenue from the sale of natural gas and partially from borrowings to be raised by BGE. Over the next few years, as the various stages of development take shape, I anticipate that borrowings not exceeding £80 million will meet BGE's requirements.

This type of capital investment is to be welcomed because of the substantial benefits which can be expected to accrue to the economy. I have already outlined some of these benefits. Other immediate benefits which should also be mentioned relate to the very high level of Irish input into the project and the jobs it provides. During the period leading up to the commencement of the construction phase, there was great awareness of the need to maximise the Irish content.

The co-operation of the IIRS, the Confederation of Irish Industry and others, was a major effort to ensure that the opportunity for use of Irish goods and services was highlighted. As a result, I am pleased to be able to tell the House that, notwithstanding that the major items, such as the pipe and fittings, had to be manufactured abroad, 60 per cent of the value of the pipeline project will be sourced in Ireland. In terms of jobs this means that 700 to 800 Irish people will be employed on the project overall.

The building of the works main into Dublin city and further extensions of the grid which I have mentioned also promise substantial employment as the various projects get under way. That this level of home input should have been achieved on a project of a type and size new to this country is a tremendous tribute to all those who contributed to bringing it about.

We must not overlook the immense benefits to town gas enterprises. As I indicated earlier, the distribution of gas through these enterprises will revitalise what was an ailing industry, give security of employment to workers, provide opportunities for investment in what is becoming an expanding industry with bright prospects, and provide a unique opportunity for private industry to cooperate with the State in maximising the distribution and use of Kinsale gas. I am confident that the House will support this Bill which is designed solely to enable the board to borrow for the project. I therefore recommend the Bill to the House.

Mr. J. Daly

A Chathaoirligh, I should like to take this belated opportunity to welcome you to the House because when I spoke for the first time yesterday you were not here. I am very glad to see you here. I should also like to welcome the Minister. This is my first opportunity to welcome him to the House. I will not be hypocritical and say I hope they will have a long stay because if I can help it they will not. Apart from the fact that they are fully qualified for their positions I claim that both of them are friends of mine.

I have a few questions to ask the Minister about gas. The first is: how accurate is the estimate of the amount of gas available? I heard him say it is one million million cubic feet, which is sufficient to maintain a daily production of about 124 million cubic feet over a 20 year period. In the second estimate there was an increase of 35 per cent. Will there be an annual check on the amount of the gas available? The Minister compared this industry to the ESB when the ESB were set up in the late twenties. The ESB helped us to become an industrialised country. A mistake was made at that time which is being repeated now. We have experience now which we did not have at that time. In starting this gas project we should manufacture the equipment, the pipe line fittings, the conversion units for town gas such as cookers and other domestic equipment. If they were manufactured here they would provide valuable employment and also reduce our imports.

I am glad the Minister has made arrangements with the Northern Ireland Government about supplies to the North and that the matter is about to be ratified by both Governments. While it is a good idea, we should not move too quickly until the position in Northern Ireland has settled down. We could be linked very profitably with the Northern Ireland electricity grid but it has been blown up on several occasions. If they blew up the electricity grid the same people could blow up a gas grid. Until times are better and more hopeful in the future, we should delay taking that action. I welcome this Bill. The gas field is a great find for us. Much of our hard earned money has been going out of the country on imported fuels. This is the first step in putting our house in order.

Mr. Crowley

Like Senator Daly I welcome the Bill. What a transformation this is from the time when we learned in our geography lessons at school that we had no native source of energy except turf.

Dr. West

The Senator went to the wrong school.

Mr. Crowley

The first man to contradict that and question it was the late Seán Lemass who embarked on a very farseeing, visionary enterprise when he set about ascertaining whether we had any mineral resources and energy resources. All of us who lived through that scholastic era will be delighted to hear the then experts contradicted and to realise that we have this great natural native source of energy. I take Senator Daly's point that we have to be very careful about maximising the benefits from this discovery. It would be easy to use it and sell it in all directions but first we must ensure that native employment is maximised in this project. I am sorry to say that this has not been the case up to now. Irish welders are unable to gain employment from this Dutch-Irish company. They have been discriminated against in the sense that the employment has gone to Dutch welders. I would go so far as to say that our welders are every bit as good as any welders in the world and our work force is every bit as good as any work force in the world. I suppose one could understand it if the discrimination occurred in Holland but to have it occurring on our own native soil is a serious indictment of all of us. We have to ensure that our people get the employment. I am sure the Minister has been made aware of the fact that there is this disquiet about not giving our own people the employment they deserve on this project. A great deal of money is being invested in this project which ultimately will have to be paid by the Irish taxpayer. It should be the sine qua non of any operation in which the Government have any say that preference is given to employing our own people.

It is very good that we have available to us such a big market across the Border. I should like to pay tribute to the Minister for his initiative in going across the Border both on the political and the business side of the operation and having discussions with the Minister in the North about the supply of gas to the North. These economic ties cement the relationship between North and South. This is such a new source of energy and so many of us know so little about it that obviously we can only listen to the experts and I suppose believe what we are told. How can we ensure that we get the maximum return on the gas find off Kinsale Head? How can we ensure that we can prolong it and get the greatest possible payment for its export? How can we sustain the quality of that gas on a long-term basis? Are there any plans to plough back some of the revenue or profits into exploring for more gas? It is my opinion that exploration off our coasts for both oil and gas has decreased dramatically and I do not think that is a good thing. We should be encouraging the continuous exploration off our shores for all sources of energy.

I also welcome the involvement of the European Investment Bank. I do not think the Minister mentioned the rate being charged by the EIB. Nevertheless, we have under-utilised this bank. This bank has available to member countries money at reasonable interest rates. I am glad to see that on a project like this we are using the European Investment Bank, and I hope it is the forerunner of many more projects in that field. I hope also that, in the formation of a national grid, agriculture will benefit from this new-found energy. Especially from Cork to Dublin there are many large co-operatives which could utilise this source of energy. The cut in cost to the Dublin consumer is something in the region of 40 per cent. Therefore, the saving in energy for the farmer must be in the same region. If it were possible to co-ordinate a policy where not alone do we have urban Ireland but rural Ireland benefiting, we would have come a very long way. As a Member of this House and a TD for several years, I welcome this Bill and hope it will be the forerunner of many more.

Mr. Ferris

Like my colleagues, I welcome this Bill and compliment the Minister in devoting the same amount of energy to this portfolio as he did to his previous one. If he continues that good work, I have no doubt our natural resources, particularly gas, will be exploited to the fullest.

The justification for an increase in capital expenditure to enable An Bord Gáis to proceed swiftly with this project can be justified because of not alone the development of our natural resources, but the benefits that will accrue to our economy, in the employment sector and in helping the reduction of fuel costs for the housewives and the consumer.

Senator Crowley in an excellent contribution, dealt with a few areas I intended mentioning, particularly the extension promised by the Minister's predecessor in regard to Limerick and Waterford, which are of paramount importance as second stage developments on this pipline. It is obvious that Dublin has to get priority. This is not the first good thing that came out of Cork to Dublin, and I hope the Dublin people appreciate it. They did not always appreciate the good things that came from Cork. On the road from Cork to Dublin one passes the most important agricultural land in the country and, as Senator Crowley said, it is imperative that agriculture should benefit from the spin-off.

Experts have questioned the feasibility of giving priority to the ESB. There are technical people who will argue that to use natural gas in the production of electricity is not the most efficient way to use this natural resource nor is extending it to NET, but if it reduces the cost of electricity we must welcome it. We must always use the technical expertise available to us to ensure that we are using this wonderful resource to the best possible advantage. All experts agree that because of their huge energy costs in milk and allied processing industries the co-operative movement could benefit from this resource. This is particularly true in the case of Mitchelstown and my own town of Tipperary where we have a major co-operative just a stone's throw from the extension proposed for Limerick. Tipperary town is adjacent to the Limerick border where the pipeline will pass and I hope serious consideration will be given to this matter because of the importance of the Tipperary co-operative movement in the dairy industry.

The Minister mentioned that town gas companies, which have been run by corporations are at present carrying out studies. Not alone has Clonmel carried out a study, but it has finished a study and is 80 per cent through the work of replacing the total pipeline in and around Clonmel, to be prepared for the pipeline from Cork to Dublin.

It will pass close to Clonmel, the corporation have taken steps to ensure that they will benefit initially. Clonmel is one of the few small urban towns that had a town gas supply years ago, maintained it in difficult circumstances and are now geared to reap the consequences of our natural resources.

The other point Senator Crowley mentioned and which is vitally important to us, particularly in the trade union movement, is that the Minister envisages an increase in employment of 700 to 800 people. If this is true — and I hope it is — I hope the Minister, through the Department of Labour, will ensure there is no discrimination against Irish workers. We spent millions of pounds on capital projects particularly on the Shannon Estuary where certain expertise was required during the construction of various projects — Aughinish and others. No apprenticeship scheme took place on site during the construction process and we lost valuable expertise and we have to depend on international and multinational companies. It was impossible to give a contract of this nature to an Irish firm because it was a breakthrough for us. It is good to know there are Irish people associated with this international company. I saw some of the work of this company in Denmark where they have laid an extensive gas line. I commend the company and their Irish associates to the House and I hope that during the construction of this pipeline they will have an apprenticeship scheme on site. The National Youth Employment Agency should be in close touch with this company to ensure that through the agency, young people who complete AnCO training courses can be employed on site and acquire new skills. If our resources are as good as we are led to believe, it is obvious that major extensions to this scheme will take place all over the country, not alone in the towns and cities mentioned here — Clonmel, Limerick, Waterford and Tipperary — but many other towns will benefit. We will be demanding in this House and elsewhere to have extensions to this pipeline. It is imperative that we have suitably qualified young people. There should be various schemes to assist young people to get gainful employment. Here is a way they can achieve a specialised skill. I hope the Minister will look at the possibility of having young people apprenticed on site to this specialised work of gas welding. The Minister said he hoped the materials used would be Irish, but I am advised by farming organisations that when this pipeline is going through people's lands many fences will be removed both in the farms and on the roadside, and many new gateways will be erected. I am told all these gates have been manufactured elsewhere.

Mr. A. Reynolds

That has stopped.

Mr. Ferris

I am pleased to hear that the Minister has taken action in this regard. This was ludicrous, because the Irish manufacturers are second to none and I am delighted that they are now providing these gates. That is the kind of action I expect from somebody like the Minister. I complimented him in his previous Department and I hope he continues to use that kind of influence in this area. He has the co-operation of the Labour Party and the trade union movement in ensuring that we exploit to the fullest our natural resources and that the rest of the country will benefit in addition to the city of Dublin.

Mícheál Cranitch

Is cúis mhór áthais dom an Bille seo a theacht os ár gcomhair inniu. Mar a dúirt an tAire ina ráiteas, is Bille stairiúil é agus tugann sé an-mhisneach dúinn, agus ba cheart go dtabharfadh sé an-mhisneach do aos óg na tíre, a leithéid de Bhille a theacht os ár gcomhair inniu.

In welcoming the Minister again I commend him on the historical significance of this Bill. Perhaps we do not realise our blessings. God has been very good to us. Two of the greatest blessings He has given us are the sea and our coastline. As the song says "Thank God we are surrounded by water".

Dr. West

We have a land border too.

Mícheál Cranitch

Sin scéal eile, ach ní fada a mhairfidh an mhí-ádh sin.

I was delighted the Minister gave us the figures. His calculation of 20 years appears to be correct: maybe it is underestimated, but it would be 20 years at least on normal gas consumption.

Could the Minister, or whoever will be responsible, get going immediately and test for further supplies of gas along other parts of our coastline? If gas can be found in Kinsale, why can it not be found elsewhere? I have a feeling that there is more wealth in the ocean than we could ever dream of. A gas field is not what one would call a renewable asset as is our fishing industry but there must be other places where such gas might be found and now is the time to do everything humanly possible to find these other fields. This gas find in Kinsale could go a long way towards revolutionising industry. Take the pipeline that has been undertaken between Cork and Dublin: not alone will there be hundreds of people employed but there should be great scope for ancillary industries. I hope everything to be used in that construction — every nut, bolt and screw — will be manufactured and supplied at home. That is of vital importance.

Senator Ferris in his excellent speech referred to gates being of foreign manufacture. Thank God the Minister was on his toes and put an end to that. There is no excuse for that sort of thing. Where pipes are being laid there will be lots of other things besides gates needed. There will be fences, material for knocking and erecting fences, building walls, and so on. One thing leads to another. Everything we use in every industry, and ancillary industries, should be of Irish manufacture. There is no excuse for having it otherwise. Reference was made to the skills of workers. I hope AnCO will provide special courses where feasible so that our young men operating these appliances and doing this work will have the best training possible.

Reference was also made to gas going to the Six Counties area. Thank God for that. Everything that will bring us into closer contact with those people and everything that will go any way towards mollifying what we regard as their groundless suspicions will help to cement friendship. Besides, it will be a profitable exercise as far as we are concerned.

I am worried about costs. The Minister in his statement said that the overall cost of the pipeline from Kinsale to Dublin was not expected to exceed £45 million. That, he said, included the cost of the acquisition of wayleaves, engineering, communications and other related projects not covered by the pipeline construction contract itself. By the time it is brought into Dublin the cost is estimated to be £60 million. Unfortunately from experience, it has to be said that no matter what estimates were suggested as being acceptable in other areas, up to now somehow these costs seem to escalate. I hope firm contracts will be laid down and that we will not be faced at a later date, maybe one, two or three years, with having to bring in special Bills to salvage these operations because of increasing costs. I have great hope in the Minister. He is a very energetic and farseeing man. He seems to be lucky. Everything he puts his hand to seems to come right.

I see that £80 million borrowing for capital expenditure would be required. That will be £80 million well spent. I wish the Minister luck. We should thank God for what the sea has given us, and I look forward to the day when we will discover many more gas fields.

Mr. Mallon

When one reads the term "historic significance" one usually expects a little pretension to follow. In this case we can truly say that what we are discussing is of historic significance, because it is the beginning of what we all hope and believe will be a breakthrough into the field of energy, of our own natural resources.

I should like to compliment the Minister on one term used in his speech, because I think it will be a very rare occasion when I will be able to refer to it, and that is, the national energy network. On the National Heritage Bill I referred to the fact that unless it was geared in such a way that it affected the lives of the people living in the North of Ireland, then it could not be properly termed a national Bill. I should like to pay a compliment to the Minister. Within this Bill we have what is genuinely a national energy network and something which will benefit all the people of this island. Apart from the concrete advantages there is a very symbolic element in it also, the symbolism that both parts of this island, in terms of energy, can be complementary to each other, that they are part of the same island and that they have the same problem, that is, the need for energy at the cheapest possible rate. That should not be lost on people on either side of the Border.

The concrete benefits are perfectly and readily obvious when one considers that in the North coal, oil, gas and electricity, of which we have a surfeit, have been costing somewhere in the region of between 30 per cent and 35 per cent more than it costs on what is termed — if you will pardon it — the mainland. It is an incredible situation, that people in Belfast, Derry, Larne or wherever they may be are paying more than one-third more for their energy than they would be in Liverpool, London or any part of England. Yet we are assured that Northern Ireland is exactly the same as any other part of Britain. It is tragic that that situation has gone on for years, because it is one of the problems which has contributed to the very substantial poverty element which is growing in the North of Ireland, which in itself is interconnected with the other problems of violence and unrest. I regard it as a scandalous situation that the very same Government which keep telling us how lucky we are to be part of the British connection, how lucky we are to be part of that British way of life, at the same time say: "Pay up, chaps, it is going to cost you one-third more in terms of everything". That does not apply only to energy; it can be translated into the agricultural industry, foodstuffs, fertilisers and every other single factor.

Looking at it from that point of view, I give a special welcome to the Minister and to the proposals in this Bill, but I have one slight reservation. There was a period of time in relationships between North and South which could best be described as the cross-Border co-operation era. There was a slight weakness in it because the term "cross-Border co-operation" seemed to have been a euphemism for doing nothing. It developed into a little ping-pong game: when one made one's inquiries here one was told: "Oh no, that would be progressing but the Northern Ireland Office is stalling on it; they are dragging their heels". When one dutifully went to the Northern Ireland Office, one was assured in the same sincere tones that that would be proceeding but the Department in the South were holding it up. That went on for some years. I have every confidence that the present Minister will not allow cross-Border co-operation to become a euphemism for doing nothing. I have every confidence that he will never allow that type of ping-pong game to develop in relation to what substantially affects the lives of all people. I have every confidence that he especially will see that that type of approach is at an end.

The concrete advantages of this network are very substantial, apart from the cost. It is almost unbelievable that schemes were afoot for the conversion from gas of all houses in the city of Belfast even when it was mooted in the early stages that this supply from Kinsale may be possible. It is incredible that that type of thinking should have existed, but when one looks at the way the city of Craigavon was developed and the moneys which helped to develop that city which has now been pulled down one can imagine the mistakes that might have been made here, that is, if every house in Belfast had been converted to electricity when there was the possibility of this gas coming on tap. If it had not been for the quick action of people on this side of the Border that mistake would have happened. That would have been tragic, because it would have tied the people in Belfast to that extra one-third or more for their energy when this gas was going to be available to them.

Like Senator Daly, I have certain reservations about the safety of this pipeline when it starts delivering gas to the North of Ireland. I do not agree with him that what we should do is delay until times get better. The reality of the situation is that if we delay until then, there would be a very long delay. I join with everybody in this House in absolutely condemning the actions of those who presume to speak in favour of Irish unity or act in the name of Irish unity day after day, week after week, and who blow up the very concrete links we have with this part of this island. I speak especially of the electricity grid, which has not worked for years because the people who say they believe in Irish unity keep blowing it up, causing disunity in those terms between both parts of the island.

Last week the rail link between Dublin and Belfast was bombed on three separate occasions, and that goes on week after week. I hope everybody will join with me in unreservedly saying to those people that their unity is a spurious form of unity; it must be spurious because that which unites people must be a good thing, it must be positive and constructive and that which divides them must be part of the cancer in our society. I find it strange how people can claim and espouse unity on the one hand and on the other do everything in their power to ensure that even the little basic forms of unity we have cannot exist. We should take every step possible from now on to ensure that this supply of gas to the North will not be subject to those types of attacks.

I have one fear — it might well be an unrealistic fear but I hope the Minister will reassure me. There had been some speculation that rather than go overland the pipeline might be laid under the sea and go beneath Carlingford Lough. The net result would be that a vast number of towns in the North of Ireland which badly need this gas could not avail of it. It would become available only to the city of Belfast. I have no doubt that that would be a very fundamental mistake because, once and for all, it would eliminate towns like Newry, Armagh, Omagh, Derry and many other provincial towns from availing of this opportunity to have this gas. I await the Minister's observation. It may well be an unnecessary fear but I thought I should express it nevertheless.

Finally, I congratulate the Minister on the Bill. I recognise it is one of the few Bills or proposals to which we can really put the term "national". The Minister referred to the negotiations which are to take place. May I ask that they proceed with the greatest possible speed? I ask that this undertaking should start as soon as is humanly possible and that it does not return from whence it came, to the sea, but remains overground.

Dr. West

I welcome the Bill. We are devoting large sums of money for the development of the natural gas industry. I would like to ask the Minister to give us some more figures particularly as to how he envisages the loan, the total sum of £80 million, will be repaid and over what period? If am correct, Bord Gáis at the moment buy the gas from Marathon and currently are selling to the ESB, NET and the Cork Gas Company. It is envisaged in the future they will sell to other organisations in Dublin and in other parts of the country, and eventually across the Border.

The price at which they buy the gas from Marathon may not be public knowledge and neither necessarily is the selling price public knowledge. I would like to have the overall figures which I think we should have if we are going to make an evaluation. The total cost from Marathon per annum since the gas started to come on stream and the overall sales to the ESB, NET and to Cork Gas Company in the period of operation will give us some estimate of the profit margin and some idea of the possibilities of repayment of this sort of loan. This resource is such that we must aim at repaying the loans which will be made to Bord Gáis and I would like to have some idea of the time over which those loans will be repaid. I hope this is not going to be another foreign borrowing which is going to be continually rolled over, as so many of our foreign borrowings are at the moment. Those figures are important.

I would like the Minister also to give us an estimate of the percentage margin that Bord Gáis are going to aim at in the future and some estimate of the total sales. This is important in trying to figure out where the loan of up to £80 million leads us and how soon we can expect it to be repaid. This is an industry in which we can expect the total repayment of the loan and not just further borrowings from the European Investment Bank or such other sources.

There is another point which was made by Senator Cranitch which I think is very important. It involves further exploration. The Minister has given us a figure of 20 years for the life of the field. This may be an underestimate but whether it is or not, it is obvious that if after 20 years the Marathon gas field is closed down there would be a considerable loss in terms of the capital outlay unless further exploration had led to further discoveries of gas. Then we could use the pipelines and the facilities we will be constructing by means of this loan for the purpose which they were originally designed for, in other words, the movement of gas.

As Senator Cranitch said, there has been a decrease in exploration for gas and oil due to a fall in world prices. I urge the Minister to encourage further exploration by being flexible in his agreements with the oil companies when they are doing their exploration in the sense that the original agreements were made when oil prices were high and when there was a lot of private investment. On that subject one sometimes sees certain views in the media that it is wrong for private investors to make a profit, but that is absolute nonsense. Some investors have made a profit and others have suffered a loss on oil shares. The fact that people invest in oil exploration off our coast, and particularly our own people, is basically good and essential. The overall situation is that probably people have not made a great sum and they have not lost tremendous sums.

Every time there is a share transaction the Government make money. There is stamp duty, transfer duty and all the rest of it. It cannot be bad for the economy and it is essential that private investment be encouraged. To do that, I hope that when the Minister is periodically reviewing licences and the contracts of the exploration companies, he will take into account the effect of world oil prices. It is very important that we do not stick our heads in the sand and that we realise that the world energy situation has changed dramatically since the exploration was first undertaken off our coast and that the licences and the levels in which they are set reflect current oil prices on the international market. In other words, we should ensure that exploration costs are not made so high as to discourage further exploration off our coast, because if we are going to spend money of this nature it is essential that the gas supply does not run out.

I welcome also the decision to start discussions with the Minister's opposite number in the North concerning the extension of the pipeline to the North of Ireland. I reiterate everything that Senator Mallon said about the safety problem of the pipeline. I think this also involves the electricity link and the railway link between the North and South. Organisations such as the Provisional IRA who disrupt these links could not have any interest in Irish unity. I do not think they have any interest in Irish unity; their interests are quite different. I do not think that people who blow up the railway line between Belfast and Dublin or blow up the electricity link between the North and the South or who threaten to damage a gas pipeline running from Dublin to Belfast have the slightest interest in Irish unity. I think they are interested in getting control for their own purposes, but they are not interested in Irish unity in the sense that we know it. I urge the Minister that if we are to complete this extension, as I hope we will, and I hope it will go ahead with all possible speed, the way to deal with the problem is to look at the security situation in a totally different way from the way it is currently being looked at, and not to criticise the security forces on either side of the Border. In this connection we should be thinking ahead and thinking of special security arrangements which are connected with these particular links. It may mean the creation of special forces to deal with the situation. It may mean that the special force created to, say, protect a gas pipeline will be able to cross the Border without hindrance. It may mean a joint force. If we are going to run a pipeline which costs an enormous amount of money and if it is in any danger whatsoever, then we have got to revise our security arrangements and make it a great deal more difficult to blow it up, damage it or disrupt it in any way.

When the Minister is thinking about this, as obviously he will be with his colleagues in the North, I urge him to take into consideration the railway and electricity links. People are sick and tired of these being blown up by so-called patriots: certainly they are not Irish patriots in the sense of the term as we use it. The people, North and South, would back up a scheme which would be totally different from our current security arrangements to protect these vital links between North and South.

I am glad that these discussions are going ahead at the moment. Senator Mallon made some reference to it. Relationships between the Government and the Government in Westminster are supposedly at a lower ebb. I think we should ignore these relationships altogether. The fact that they emerged after the Falkland Islands crisis really has nothing to do with the relationship between Dublin and Belfast and whether pipelines like this should go ahead. I think the two things are totally unconnected, and I am delighted to see the Minister pressing ahead. As Senator Mallon said, this will be truly regarded as a national resource.

I think that ultimately these commercial links will be much more important in bringing about resolution of the conflict concerning Northern Ireland than many other so-called political initiatives. I would say that people in the island as a whole are changing their attitude about our security situation. I think if one reads between the lines of the debate on extradition last week one will see we are changing our minds on that, if slowly, and the decisions in the courts in the last few days show that the situation is changing overall. Basically I think we are not going to put up any longer with disruption of our normal commercial life by terrorists and we have got to stop it. If the development of the gas link makes us look again at the security situation and take new measures to deal with its safety then I think it will be of benefit to us all.

Mr. O'Connell

I should like to welcome the Minister here. For however long or short his tenure of office may be, I wish him the greatest personal success. I would also like to welcome this Bill. In particular it gives pleasure to me, as well as it did to Senator Crowley, to be able to stand here and to deliberate upon the substantial natural resources which have emerged literally from beneath the surface of our island and its coastal waters since the school days of Senator Crowley and myself. In those days, as he so aptly put it, it was assumed there were no natural resources of any merit other than peat in this island and that it was one of the numerous misfortunes under which this distressed people had to labour. Indeed the word "labour" is inappropriate, since employment was not possible in the island and it had to be sought elsewhere.

He referred eloquently to the late Sean Lemass and I, too, would like to join in praising the work that Mr. Lemass did in that area. However I would like to point out to Senator Crowley that Mr. Lemass was not the first person to make a major contribution towards the development of natural resources. Neither Senator Crowley nor I would have been available at the time to comment or to notice the comments that were made at the time of the Shannon Scheme, but perhaps more senior Members of the House, or those Members of the House who are familiar with the history of our nation, will recollect that when the Shannon Scheme was first projected it was greeted with derision and with howls of abuse. It was suggested that if the Ardnacrusha, the Shannon Scheme, was built and carried out there would not be in the entire nation, or this part of the island, enough need for the resources of that scheme. We know now, of course, that the Ardnacrusha scheme alone only provides a very small proportion of the total production of electricity needed in this part of the island.

Senator Crowley also referred to the question of employment of Irish people on this pipeline and in the subsidiary industries that would arise from it. In this context it is important that we should have a coherent policy with regard to the training and inclusion in the workforce of technicians and technological staff. Those of us who are involved in what might be described as the educational industry frequently are lectured on the subject of the tendency in that educational industry towards what are regarded as esoteric and impractical pursuits in the academic area.

Leaving aside for the moment the question whether education should be purely technological or not, it is a fact that the educational system in this country has adapted itself very well. There are still things to be done but it has adapted itself very well to the technological demands of our society and economy. However, in the context of this pipeline, the gas industry and the subsidiary industries which will arise from the provision of gas, it is important that we have a coherent policy and a policy that looks beyond the immediate future, beyond the period during which this pipeline is being constructed and the period when the industries will be coming into existence.

In this context, I will refer later on to the long-term projections on the availability of resources of our own. Clearly we have a resource here at the moment and we are right to exploit it and to make the best use of it that we can. However, two questions arise, and I would like to hear the Minister's views on this later on.

The first is the rate at which we intend to use these resources, the resources that we know about at the moment, and also what contingency provisions exist. We are talking of a period of time — may be 20 years time, maybe slightly longer — when according to the present projections we will have to consider where we are going to get the gas to service the system. Whereas a period of 20 years may seem quite considerable — much longer that the proverbial week that is a long time in politics — nevertheless we have had in the past cases where public authorities in various areas have operated on short-time scales and left the consuming public in a difficult situation as a result.

Whereas we should be very anxious to make these resources available to the consuming public as soon as possible and as effectively as possible, one question that does arise, and which is causing growing concern, is the question of the safety of the gas that is to be provided and the safety of the pipelines. I am not referring to the projected pipeline to the northern part of this island — I will speak about that later — but I am talking about the pipeline itself, its subsidiary offshoots in this part of the island, and about storage facilities. I would like to draw the Minister's attention, if it has not already been drawn, to a statement on the front page of today's Irish Press in which the Assistant City Manager of Dublin stated quite categorically that the fire services of this city would not be able to cope with an accident at the projected LPG reservoir in Dublin Bay.

If we were all to take the view that anything that was at all dangerous should not be tolerated, we would not arise in the morning from our beds for fear of the dangers we might encounter in the household, which is an extremely dangerous place, on the roads which are dangerous too, though possibly less dangerous than the household. Indeed, we might well take the view that to go to bed at all would be to risk great dangers since a very large proportion of us die in bed. Consequently, we might feel that anything that was at all dangerous should not come into our calculations.

With regard to the LPG reservoir, it has been suggested that the statistical chances of an accident would be very slight, according to present plans. Unfortunately we have to take account of the fact that even the best laid plans come adrift, go astray, and accidents occur. We have to take account of the fact that while we may have made the best preparations, we may have made the best projections, we may have explored every probability, nevertheless the human factor being what it is, there may be some element in our prepartions which is unsatisfactory. I do not intend to go on any longer on this particular point, but I would be glad if the Minister could tell us something about the safety preparations and about general security. I am not thinking so much of security from the point of subversion, although obviously that could be an important factor but I am referring to the general security of the pipeline and how it is proposed to protect it either from those who might deliberately wish to damage it or from the various kinds of accidents that can occur.

The major user in the Dublin area is going to be — as far as I understand it — the Dublin Gas Company. Those of us who were fortunate to grow up in the south-east part of the city almost under the shadow of the large projections of the Dublin Gas Company, hold that particular body in a certain degree of affection. It is literally part of the skyline, it is literally part of our lives. Many of us who lived in this city during the hostitlites which were known in this island as the Emergency may recollect various aspects of the gas supply and the failure of the gas supply which entered the mythology and culture of this city.

However, though we may hold the Dublin Gas Company in affection, some of us who have had recent contacts with its minions and with the ramifications of its attempts to supply us with gas, or with what are alleged to be preparations for the supply of Kinsale gas, may look upon the company with something less than pleasure and possibly with a somewhat jaundiced eye. Friends and acquaintances of mine have heard from me at great length from time to time an account of what happened on my own particular road during the course of preparations for Kinsale gas. Whereas I would regard these matters as being of some public importance, I do not think it would be appropriate for me to go into very great detail. All I would say here is that, affectionate though I may be towards the Dublin Gas Company, favourable though I may be towards it, prejudiced in favour of giving it the greatest support and help, this favourable attitude of mine has been gravely reduced by the way in which the Dublin Gas Company approached that particular task. I would add they were not exclusively to blame for what happened. Dublin Corporation, with which in the past I have had certain connections, were also involved. The road on which I live is a very small, insignificant road and one which does not require a great deal of work but it took four months for the Dublin Gas Company and Dublin Corporation to carry out the necessary works in order to convert the pipelines on that road to provide for Kinsale gas. That period coincided with the period of Christmas, a time at which the supply of cooking fuel and cooking appliances is a matter of great concern to the domestic side, even of Senators' households, and all I could say at the present time is that Christmas and the provision of the Christmas dinner for Christmas 1981 have entered the mythology of my own family and household. It coincided with a period of cold weather but the supply of gas was, to put it mildly, intermittent and interrupted at frequent intervals to the considerable danger of my good wife's patience and health. That and certain other subsequent difficulties which I had in trying to persuade the Dublin Gas Company that I had paid my bill despite the provision of cheques and receipts and so on. Again, it did not prejudice me in favour of the Dublin Gas Company.

I have approached this matter in what might be interpreted possibly as a somewhat facetious fashion. What I would say here is that with regard to the Dublin Gas Company, I think that I would hope that they would be successful. I would hope that they would provide a good service to the consumers of this city. I would hope that they would make the best use of the resources that are going to be made available to them by us, that is to say by the Parliament and Government and the taxpayers of this country. On foot of my own personal experiences I am not optimistic about that.

The Minister speaks, for example, of the Gas Company's optimism that, on the basis of its projections it can expand its market by about six to eight times. I would be very glad to see that happen, but it seems to me to be a projection pulled out of a hat and I would like to hear from the Minister some kind of concrete backup to that projection.

On the question of the pipeline to the north I would like to join with Senator Mallon in the remarks that he has made about those people who believe that they can cement and strengthen the links between the two parts of this island by destroying pipelines, electricity grids and the like. There is obviously a security problem. One gets the impression that the security forces on both sides of the Border have more or less given up the struggle, and it is regrettable that we should have capitulated, or appear to capitulate, to that blackmail.

I would like to conclude by considering the figure of £80 million which is the subject of this Bill. The original figure was £30 million in 1976. I would like the Minister to indicate in more detail why it is that the figure has increased to that extent, whether it is mainly the result of inflation, and also to indicate his views as to whether this figure of £80 million is an adequate one and whether or not we may find ourselves in a few years' time having to come back and to provide a larger figure.

Mr. O'Keeffe

First, I would like to welcome the Bill and congratulate the Minister on his foresight. We have seen the development of the Shannon Scheme, the Electricity Supply Board and Bord na Móna. We are going to see something of a major development and something that is very good for this country in An Bord Gáis.

I believe the negotiations between Bord Gáis and the Irish Farmers' Association were excellently conducted and it is a great tribute to a semi-State body that it can talk to farmers. We must look at other organisations like the county councils and other semi-State bodies that we would like to see having greater co-operation with the farming community because, as we are aware, there will be major disturbances in the areas where the pipeline is being laid through the country from Dublin to Cork, going through some of the finest agricultural land involving problems in regard to crops. I am glad to say that farmers, by and large, are greatly satisfied with the negotiations that are taking place on their behalf between the IFA and An Bord Gáis.

The spread of employment in the extension of the pipeline from Cork is something that gives me concern. I would like more employment in the Cork area, which is the source of the supply. I believe that we must have equity of employment along the line throughout the country.

There has been reference to the danger involved in the link with Northern Ireland due to mischievous activities of other people. Before we continue to the northern area, we must seriously look at expanding the supply of gas to the agriculture-based industries of the south. It has been brought to my notice that the dairy industry in two of our major centres, Ballyclough and Golden Vale, would use more gas than Limerick city. This is something that we cannot ignore. If we look at the route of the line from Cork to Dublin it passes through some of the finest agricultural land, the home of our dairy industries, namely Mitchels-town and Avonmore. Those areas are in need of servicing. We are now considering, and one can read about it in the papers, other sources of energy which are much more expensive, a mixture of coal and oil for instance, to cut down energy costs. That is going to be a burden on the Exchequer. We must look at our own resources. Those industries are creating great employment and we find that the larger six of the dairy industry have approximately 9,000 people employed handling 600,000,000 gallons of milk and having total sales of close on £1,000 million. They are entitled to priority. We must get down to negotiating with those under the parent body, the Irish Cooperative Organisation Society.

It will be argued in view of the supplies required for Dublin that we will not have enough capacity in the pipeline to supply the agriculture-based industries. I do not agree with that. Our peak season in the dairy industry is from April to October while in the case of domestic requirements the peak period in many of our larger towns and cities is from the month of November until sometimes around mid-March. I believe we will have even distribution in our pipeline and that it will have sufficient capacity to service this type of industry and the domestic requirements. Gas is an ideal source of fuel for our food industry. Its low content of air-borne pollution is very important. We must take that into account and that is why we cannot neglect to make this fuel available to our food industry.

Comparision with coal prices should be the criterion rather than oil prices because many of our co-operatives are now considering changing from oil to total coal. The technology has been such that they are looking at other areas of coal and oil mix with a slag type of coal. I am convinced that as an agricultural country our first priority must be to supply those industries, and rather than they having to come to negotiate with An Bord Gáis, An Bord Gáis should be going to them and asking them to take a supply of gas. We have the co-operation of the farmers and it is only right that in the area where the raw materials come from we should give them an opportunity of having some benefit from that fuel. I hope that the Minister will take those points into consideration. We cannot ignore our agricultural industry: it is our finest and greatest national industry.

Mr. Durkan

I welcome this Bill. It is a very historic development, second only to the Shannon Scheme at Ardnacrusha which is operating efficiently to this day. It is important that we should at this time in our history have been able to detect this source of energy and be able to set about utilising it in the shortest possible time and to set about converting it for the many uses to which we can put it.

It is essential to ensure the most direct conversion of this very valuable energy resource to the industries that need it. There would not be much sense in supplying this fuel to an industry which might in turn supply another energy resource at a higher cost. We would have severe and ridiculous duplications if that were to prevail. This source of energy is very important and if we can ensure that it is converted directly to the sources that require it we will then have overcome the biggest problem associated with it.

Up to a few years ago many people in this country did not believe there existed such a resource in such tremendous quantities. I would like to compliment all those responsible since exploration began in relation to the detection of the energy and in making it available. I would like to see the greatest possible use of this energy by industries that are most suitable for its utilisation. There immediately comes to my mind Nítrigin Éireann and the conversion to nitrogen. We are all aware of the suitability of natural gas in that area.

There may be a number of State or semi-State agencies that will have need to avail of this energy and that may be already in receipt of large-scale State subventions. We are now setting up the machinery for further subventions by the State to another semi-State company and we can arrive eventually at a ridiculous situation whereby the State will be funding a number of companies who may not necessarily be in a profit-making situation. We could, as Senator West has already mentioned, find ourselves going to the European Investment Bank for more and more money as years go by.

Another speaker has drawn attention to the fact that the cost of the scheme has already gone up from the original estimate of £30 million to £80 million. We must keep a very careful eye on the financial end of the matter and ensure that we do not waste any of this valuable energy resource that has now become available to us. If we allow waste we shall have some serious questions to ask and answers to provide.

In relation to the piping of gas there is also the safety factor. A number of speakers have already mentioned safety in other areas and events will yet prove that the safety factor in gas piping will become very important in future years. Despite the best technical advice and the most advanced techniques which are being used in conveying the gas from Kinsale, I believe it will be necessary to introduce sufficient fail-safe methods to ensure that if there is an emergency the State will be able to provide the necessary personnel and know-how to handle such a situation and not allow something to proceed as in the case of the transport of dangerous liquids where fire services not only have not the knowledge or know-how of dealing with it but do not have the resources to cope with an emergency arising in that area.

The availability of this source of energy to the Electricity Supply Board should also ensure more efficient production of electricity and should have some impact on the reduction of the cost of that energy to the consumer. It has been commented upon very much of late that the cost of electricity would now appear to the average consumer to outweigh its usefulness. That is a sad thing because it is a non-polluting energy resource and it is essential that when natural gas is made available to the ESB we should impress on them the necessity to make their energy available to the consumer at a more realistic rate or at least to ensure that the increases experienced over the past number of years do not continue at such a rate.

In relation to the national energy grid, recently it was alarming to find that during cold spells and at peak consumption periods our present energy resources were not sufficient.

That again relates to the Electricity Supply Board and its inability to deliver at peak periods. This has become obvious in the past five or six years when at peak periods there was loss of power, and, in fact, a number of areas were without power as a result of fusing of various sections in the supply. This was caused by overloading. In fact, we had the ridiculous situation just a few years back when at the worst period of the cold spell there was almost rationing of electricity supplies. I would hope that when this natural gas is made available to the Electricity Supply Board we will not have a repetition of what we have had for the last few years and that we would have sufficient supplies of both gas and electricity and, with the support of the gas, ensure that the domestic consumer is at least satisfied and that industry likewise has sufficient to proceed.

I would like to welcome the Bill. As I said earlier, I believe that it is of tremendous historic importance. It comes at a time when this country needs any assistance that it can get. The best possible assistance this country's economy can now have is that which can be generated from within its own resources or from near its own shores. The time will come when we will become more aware of the importance of our off-shore exploration and, indeed, we will have to look further afield than we have been looking in our off-shore explorations. We will also find that other powers will cast envious glances in our direction as time goes by — some of whom are not in the same happy position themselves. With the increased demand for energy generally throughout Europe there will obviously be more and more envious glances cast in the direction of those who have arrived at producing their own extra energy.

I hope the Bill serves the purpose for which it was introduced. I compliment the Minister for the speed with which he has introduced it. I certainly hope that the country as a result will be much better off.

Mrs. O'Rourke

Like other speakers, I welcome this Bill and welcome particularly the Minister who has brought it here to us. I would see it definitively as a Bill of action and very much suited to the Minister who has introduced it. The whole scene has started off very well on an optimistic note because the re-valuation of the reserves in the field upped the original figure. I think that any enterprise which starts off on such a good note is one which will have a good future. So often an enterprise starts on a high note and then the re-valuation process is down rather than up.

As a housewife and as a woman I am particularly pleased that the Minister foresees that perhaps the availability of gas to the ESB, as the previous speaker mentioned, will help to stabilise electricity prices to the consumer and save on oil imports, thus assisting our balance of payments. Again, we are only beginning and scratching the surface of what could be a vast potential for Ireland.

The Minister has explained very carefully and very clearly that the most efficient use that can be made of the Kinsale field is to maximise the availability of gas for the premium domestic market and for use in industry and commerce generally. The vast ramifications of this Bill and how it will change the face of Ireland very much as Bord na Móna and the Shannon Scheme did are not yet clear to the general public. We have seen from our history books how the face of Ireland was changed and the economic and social transformations that swept through our country when those two massive Bills were brought in. In the years to come Ireland will benefit to an enormous extent from this particular Bill and from the reserves which we now know are there and which hopefully will flow, and flow without any trouble or interruption.

I am particularly glad that the social out-turn from this Bill is so important. I refer to the link with Northern Ireland and the discussions between our Minister, Deputy Reynolds, and Mr. Butler from the Northern Ireland Office. I know many speakers have touched on this, but in these times when we talk of reaching a rapport with our Northern neighbours we talk sometimes on a lofty plain, and this does not have very real meaning. In this case we have a very practical step, a hands-across-the-border move that the ordinary man in the street can understand and can realise. The economic out-turn from this will be of great importance.

Again I welcome the Bill and its plan of action and I look forward to its implementation.

Minister for Industry and Energy (Mr. A. Reynolds)

I would like to take this opportunity of thanking all the Senators for their contributions towards what will be seen in future years as a very important and historic Bill. Many of the contributions were indeed excellent and many questions were asked to which I hope to reply in detail. I think there are a few areas where a common trend emerged from the speeches of many Senators. I suppose I could deal with those first.

I will begin with Senator Durkan and the question of maximising use of our natural resources. Indeed this is something on which the economy of this country will depend more and more in the future. The nation's wealth is its people and its natural resources, and the fullest development of its people and of its natural resources is the real way forward for this economy. The Kinsale gas discovery has been and will be seen to be a magnificent contribution and benefits to the Irish economy. I do not think that this benefit is appreciated by the general public as yet.

Indeed, my job as Minister in charge in the Government of the day is to maximise the benefits for the Irish economy. At the same time we must not rest on our laurels but expedite further exploration around our coasts. I think it is fair to say, and anyone can be cautiously optimistic, that Kinsale gas head, while small in international terms, in Irish terms is extremely large. Nevertheless, one could be cautiously optimistic that this gas head at Kinsale is most unlikely to exist in isolation. The indications from geologists and others are that there should be more finds around our coasts. While many Senators called for more active exploration around our coasts I can refer them to the recent second round of exploration licences that have been issued. Indeed, the concentration has moved from the Porcupine area of the west and south-west coasts of Ireland over to the Celtic Sea area and stretching down as far as Kinsale Head. When one sees the concentrated efforts by many exploration companies to home in on a certain number of blocks in that particular area it tends to confirm information we have available to us and opinion that is freely expressed that there are some positive areas there that will need further exploration.

I would take Senator West's point and bear it in mind. When we look at our contract for exploration of many years ago, when Marathon operated also, of course, it is time in a changing world and indeed at a time when exploration budgets have been cut drastically around the world, to up-date our approach to exploration contracts. He made this point quite clearly, and I am in agreement with him and will be taking it into consideration in a total review of the exploration area.

Policy and pricing formed another theme which ran fairly commonly through many of the speeches here. I would like to elaborate on this and clarify it for the benefit of the House. On policy and gas pricing, the basic objective is to displace as much high value oil as possible, that is gas oil for cooking, heating, home, office and commercial uses, and to sell additional volumes at the heavy fuel oil prices for industry and electricity usage. The gas oil displacement is basically in the premium market but that market is small and Kinsale Head, if it was reserved for looking after the premium market, would last in the region of 50 years. It would be bad economics and bad strategy to approach the usage of Kinsale Head in this way.

The policy is to provide almost an equaly volume for commerce and industry as the premium market. In that way the life of the field will be in the area of 20 years to 25 years on the known reserves at this point in time. It is true the reserves have been increased by just over one-third since the discovery was made. I was asked how often this will be reviewed. There will be a review of the reserves every couple of years because as the usage increases and as the pressure drops that is when a more accurate and more reliable set on the reserves will be obtained. It is based on the known reserves, and the life of the field is based on that.

To get back to the policy and the utilities, the Dublin Gas Company, Cork and other towns will take into account the two ends of the market, the premium market for household consumers and the market for commerce and industry. At the same time, we have been engaged in supplying as much as possible to the ESB. I know that originally there were arguments about whether this is the most efficient use of the gas, but one has to bear in mind that if NET, who, incidentally, made their contract with Marathon before BGE was even established, and the ESB were not the large users of gas that they are today, the economics of bringing the pipeline to Dublin and the financial arrangements might not have been possible. We can argue about whether this is the most beneficial use. Some of the arguments do not bear out the great diversity of financial returns that are there. Nevertheless, we must also consider the impact it is making and will continue to make on our balance of payments and the very heavy bills we pay for oil.

The ESB price will be related to the heavy fuel oil price. There will have to be some consideration of justifiable reductions for transfer of plant and reconversion of plant by the ESB. Basically, those are the three approaches and the three markets for them. A case was made here for spur lines to individual industries and towns off the main Cork-Dublin pipeline, and possibly spurs off the Limerick to Waterford line. We are currently considering a more liberal policy of allocation of gas. It is true to say that up to recently the pricing policy of gas to industry was not very informative as far as industrialists were concerned, but there was a reason for this. The quantities required for the Dublin consumer market, the industrial market around Dublin and for the ESB had to be earmarked and identified. The quantities that would be required if negotiations were successful in bringing the gas to the North of Ireland had also to be earmarked. All those factors had to be taken into consideration before the proper planning of making gas available to industry could be identified and a cohesive pricing policy introduced. That is changing, and the pricing policy for industrialists, recognising that industrialists must know in advance so that they can get along with their planning and must have the fullest information will be available to them shortly.

I think Senators will recognise and appreciate the hook-up cost to a utility or to an individual firm must affect the net contribution per therm sold, so that pricing cannot ignore the extension of the grid and the economic evaluation that has to be done in bringing it to any particular area. That gives Senators a fair idea of the pricing policy and indeed of the reserves and the valuation that has been done on them.

I shall now proceed to comment briefly on the individual questions raised by various Senators. Senator Daly asked how accurate the estimates were and if the revaluation of 1.35 trillion is reliable. I can tell him categorically that it is reliable. As I had already mentioned before the Senator came in, it is reviewed every couple of years. As the usage increases the pressure drops and we can get a more reliable fix on reserves. All our planning and all our economic evaluation have been done on those known reserves, not based on possibilities of finding more gas or otherwise.

Senators Crowley, Ferris and many others talked about the manufacture of Irish components and the added benefits to the Irish economy and indeed to possibilities for setting up industries to home in on not alone the conversion components but the whole gas industry, which is a new operation on the Irish scene. Early indications show that applications are being made to the IDA for setting up related industries and on the question of Irish components on the pipeline itself. As I said in my earlier speech, if one excludes the total cost of the pipeline and fittings, which had to be imported, from the total contract price, one sees that the total Irish input into the project is practically pushing towards 90 per cent. That is a fair compliment not alone to the Irish Goods Council who have monitored the operation of the contract. We also allocated a man to monitor the Irish input and to monitor the progress of the contract. The question raised about the importation of gates was correct from the very early stages, but that has been corrected. We will continue to take all steps necessary to ensure that the Irish input and the maximum benefit to the economy will be gained from a project of this size.

On the question of workers on the project, I read somewhere about the number of workers but I am informed by BGE that approximately four highly skilled Dutch welders are there and that the balance are Irish welders. I also take the point made by Senator Ferris, Senator O'Connell and others that in the build-up of a new industry like this with the expertise and the skills that we should be looking at apprenticeships and training our people in the very expert skills that are needed. I have already taken this matter up with both the Minister for Labour and the Minister for Education in relation to homing in on the opportunities that are there to give our young work-force the opportunity of specialising in those skills. In my view the gas industry has a lot of potential for the future and we should maximise the benefits to our people from it.

Senator Ferris mentioned Clonmel. I am aware of the great progressive work that has been done down there and the question of supply of natural gas is now being fully examined in my Department. It would be premature to say anything more definite, but the prospects look good and the people of Clonmel have to be complimented for getting ready ahead of time to accept it as soon as it is available.

Senators Ferris and O'Keeffe made pleas for the supply of gas to co-operatives. That will certainly be examined. Now that we have identified the quantities we will be looking at the various extensions that can be made to this spur as it comes from Cork to Dublin.

Senator O'Keeffe made the point about relating it to coal. This is part of the overall pricing policy. Senator West and others tried to find out exactly what the price will be. We are in a commercial area here. BGE are commercially orientated and they will be charging the price the market can bear. Nevertheless, they will also have to bear in mind what fuels they would be replacing in selling gas to a particular company or individual.

Many Senators, including Senator Cranitch, raised the question of the difference between the £45 million and the £60 million in the cost of the link. Others mentioned the figure of £30 million. I want to get the facts straight so that there will be no misunderstanding about the question of cost in relation to this project. The contract for the pipeline itself is set at £27.48 million. It is a turnkey contract and is being monitored by a man in my Department to ensure that there are no over-spills or the extravagant way in which contracts like this in the State area have gone out of hand in recent years. This one is being monitored very closely. That is the exact figure. It is a turnkey contract. The difference between that, which takes it up to £40 million, is the question of wayleaves and other parts not related to the main contract. £60 million is the cost of bringing it from Brownstown Gate at Clondalkin right into the city. This is another separate contract. While somebody might think that we started off with a price of £30 million and we are now at £60 million that is not the position. Indeed, if one looks back some years ago when they talked about this project originally, figures of £130 million or £140 million were being bandied about. It shows where people can get lost. Certainly, those figures were estimates made when the original figures were being put together for this project. It was in the region of £130 million to £140 million. However, the House can be assured that we are monitoring right along the way so that there is no over-expenditure to the extent that has happened in other major contracts in the past.

While Senator Mallon welcomed the national grid to serve all the people of this island he drew attention to the higher prices in the North of Ireland than the UK for gas, coal and electricity. While it is not appropriate to disclose the terms of the main heads of agreement that have been reached between myself and Mr. Adam Butler on the question of the contract for the supply and the price of gas to Northern Ireland, it is closely related to the price of the utilities down here. After that visit there was comment in the press that gas here would cost more than I had sold it to the people of the North of Ireland. I want to take this opportunity to say that is not so. When the opportunity arises to disclose the terms of that contract after both Governments have approved it, then it will be seen that Dublin gas users will not be subsidising users in the North of Ireland.

Senator Mallon said he hoped that we would not continue in a ping pong exercise in relation to economic co-operation between the North of Ireland and here. It is not my intention to get involved in a ping pong exercise. My record in the last Department in which I had the opportunity of working in the economic co-operation area will show that I set up the Dublin to Derry airlink. Indeed it was totally and absolutely looked after by the Irish Government resources at the time with no input whatsoever from the British Government. That is the sort of determination I have in seeing this project through.

I can assure Senator Mallon and the whole House that as far as the Irish Government are concerned we will have the gas available at the Border, assuming that both Governments accept the recommendations of the respective Ministers involved in getting ahead with this deal. We should have the gas available at the Border crossing by 1984 and will also have it available to the North of Ireland in quantities sufficient to supply the consumer needs and the other needs on the basis of schedules of quantities that were prepared for us some time ago. We will not be limiting their requirements up there. It will be available to look after the requirements of the total community.

Senator West wanted more information on what period the loans would be borrowed and the repayments on them. Home loans or any loans that are raised in Ireland will be on the basis of seven to ten years. European investment loans, while only being negotiated at this point in time, will most probably be over a 15 year period.

With regard to the question of servicing those loans and the economic evaluations that have been done on the project, it is true to say that the capital requirements of BGE, by and large, are set at 70 per cent from external borrowings and 30 per cent from own resources. I can also confirm to the House that BGE will be allowed to retain enough of their profits to look after their own requirements and over and above that the excess profits will go to the Exchequer. This is the present arrangement on that basis. I do not think that anybody should be unduly worried about the economics of this entire project because we are into an area where I believe — the future years will show it — BGE will be in a very strong profit-making exercise. They can retain what they need for their own resources and anything over and above that will go to the Exchequer.

Senator West wanted to know the present off take. The ESB is 125 million cubic feet a day, NET 45 million cubic feet a day and the balance is about 5 million cubic feet a day. When the gas comes on stream in Dublin it will take initially about 14 million cubic feet a day, growing about six-fold over the period for the next five to ten years.

Senator O'Connell raised the question of the gas resources, which I have dealt with reasonably accurately up to now, and the contingency measures when native gas runs out. It is a bit early to speculate hypothetical situations about when it will run out. I accept the view that when the second round and future exploration exercises have been carried out around our coast and should they not be successful — I do not expect that to be the case — we will have to look at either the possibility of connection into the grid in England or indeed import gas. While I am a great believer in long term planning nevertheless until we get a better evaluation of our own possibilities around our own coast I would not be inclined to take that any further at this time.

On the safety and standards to be employed in this whole operation, I have already got the full co-operation of the IIRS in reviewing the gas standards and work practices. All work by BGE and the gas utilities is to the best international standards and being monitored and regularly checked on that basis. The full conversion programme will be monitored as well.

Senator O'Connell also raised the question of the basis on which these projections were made for Dublin gas and had I pulled them off the top of my head. I want to assure Senator O'Connell that I never pull projections out of the top of my head and I do not operate on the basis of figures pulled out of the top of my head either, because that is a very dangerous exercise. It will not get you very far in business any more than any further in politics either. The best projection is based on two independent market surveys. One has to have confidence in them when one studies them very closely. The investments are being made on the assumptions of this growth. When one considers that Dublin Gas will be in a position to offer reductions of about 25 per cent to consumers who are involved only in the cooking area and up to 39 to 40 per cent to people who will be using natural gas for a combination of cooking and heating and one examines closely the independent market surveys one can clearly see that the opportunity is there for the growth we are projecting in that particular area, given that price advantage in the market place. New schemes being planned both by architects and indeed by builders should take account of the opportunity that is there for new householders to get geared up in time for the use of natural gas and indeed for the great reductions there will be in their household bills. I have confidence in the projections, and from my experience from looking at those things I am prepared to stick my neck out and say that growth pattern is there and it is still a question for the Dublin Gas Company to attain it.

I would like to join with Senator Ferris and Senator O'Keeffe in complimenting the farmers, ICMSA and the IFA for such a great demonstration of civic spirit in this particular area for having stuck rigidly to the agreements made and for having made sure that BGE and the contractors were able to carry on with little or no interference in such a major national project. I have already asked the contractors to ensure that the lands in which they are passing and putting down the pipes in should be left, so far as is humanly possible, back in the same condition in which they found them.

I want to add my voice of congratulations and compliments to those organisations, to all the farmers who allowed it and who, understandably, had a fear of the unknown and suspicions of what a gas main running through their land might mean, for their tolerance and acceptance and for facilitating our great efforts in pushing forward with this great project so that we can maximise the full benefits to the national economy. To them I say a sincere word of thanks.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment, received for final consideration and passed.