I thank the Minister of State for coming to the House to address this matter which has serious consequences for the country. It is appropriate to discuss the proposals for the extension of the gas grid. I had meetings with representatives of An Bord Gáis in recent weeks and they informed me the board intends to extend the gas pipeline around the country. However, some areas are excluded from the proposed gas extension, which is a cause for concern, including, in particular, Kerry and the stretch of land along the Shannon Estuary, to which we have been trying attract industry. That area has the deepest port in Western Europe and two power stations, at Tarbert and at Moneypoint. Aughinish Alumina in Limerick is nearby and there are many other industries located in the area. The extension of gas to that area would aid its development.
There are many reasons the gas grid should be extended to this area. Unemployment in the area is as high as 24% or 25% compared to a low level in the rest of the country, which is creaming the benefits of the economic boom. Many people from the area are employed by Dell in Limerick and have to travel 40 miles to and from work. The last two censuses indicated a decline in the population of north Kerry, which is a frightening prospect.
The State owns a land bank of 600 acres in the Tarbert-Ballylongford area, in which major development was expected. I have been trying to attract industry to the area for many years. Statoil has planning permission for an oil refinery close to Tarbert and another private consortium owns land in the area. The land bank between Tarbert and Ballylongford, stretching five miles along the Shannon Estuary, is owned by State or semi-State companies. We have sought the development of that area.
I was shocked when I learned that it is proposed to extend the gas supply of gas found off the coast of Mayo to Aughinish Alumina in Limerick, Ennis and perhaps to Moneypoint, but there is no proposal to extend it to the Kerry region. Given that all our citizens are equal, I cannot understand why people living in Kerry should have to pay more for their energy needs than people living in areas served by the gas pipeline.
I am more concerned about the development of the area around the Shannon Estuary. The State bought land around it in the 1960s and in the 1970s there was a major demand for land in the area. It was proposed to build a smelter there in the 1980s – a Greek company was interested and the then Government made money available, but the deal went sour and since then the area has been neglected. This new gas find presents an opportunity to develop the area. When gas was found in Kinsale, which is close by, it was piped up through the midlands into Dublin and back through the country, but this area was ignored.
I am delighted about the new gas find off the Mayo coast. I was told it might be piped in from the Mayo coast, but representatives of An Bord Gáis told me it might be brought it along the coast at Kerry, where Statoil, who discovered the gas, owns land. If it is brought in at that point, it is planned to pipe it to Limerick and that would mean the people of Kerry would be ignored again. Given that there is an economic boom and that all citizens should be treated equally, everyone should have access to gas. The gas grid should be extended to every county, not only those with large populations where Bord Gáis will benefit.
The Kerry Group is based in north Kerry and it wants to use gas. There is also an oil refinery in Kerry and an ESB power station in Tarbert which is run by oil but which could easily be converted to gas. Industries in the north Kerry area could also be converted to gas in the future if the pipeline was extended.
I visited Russia recently as part of a delegation which included the Ceann Comhairle and I met members of the Duma whom I asked about Russia's gas supplies. It has gas in abundance, which comes into Europe through our grid and through England. We could get gas from Russia if we so wished. It badly needs breeding cattle and as we have breeding cattle and beef in abundance, we could barter with the Russians for their gas.
Gas should be transmitted not only to population bases such as Dublin, Limerick, Cork or Galway, but since everyone is equal, people living in rural parts of Ireland, such as Kerry, should be entitled to the same facilities as those who live in populated areas. The same applies to our transportation system, infrastructure, industries etc. If a company chooses to put facilities in a populated area because it is profitable, there should be an onus on the State to provide the same facilities to those living in rural areas. I remember parts of Kerry which did not have electricity years ago and they only got it when the people started shouting for the same rights as those living in populated areas.
We now have natural gas off the west coast. This is an ideal opportunity for the Government to make a decision to extend the gas pipeline from Limerick to the rural parts of Kerry. All the people of rural Ireland should have the same opportunities and they should be treated equally. This is the time to do something about it when the economy is doing well and there is money in the coffers. I thank the Minister for taking this matter on the Adjournment.
Minister of State at the Department of Public Enterprise (Mr. Jacob): I thank the Senator for raising this matter and giving me the opportunity to clarify the situation in relation to a proposal by Bord Gáis Éireann to construct a pipeline, which has been widely reported on in the past week. BGE submitted an application to me recently seeking approval under the Gas Acts, 1976 to 1998, to construct a natural gas transmission pipe between Dublin, Galway and Limerick. The effect would be to complete a national gas ring main that would bring gas west and facilitate the transmission of additional gas to the south and obviate the need to strengthen the Dublin-Cork pipeline, which is reaching full capacity. Bringing the gas main to Limerick would also facilitate extending gas to Moneypoint if a decision was taken at some stage in the future to convert Moneypoint power station to gas. The application is being examined in my Department in the light of my obligations under the Gas Acts. I have not yet given my consent to it. The application will also be examined in the context of the emerging regulatory environment for the liberalised gas market and the outcome of recent studies into gas demand and infrastructure requirements to the year 2025.
In 1996 Bord Gáis carried out a detailed study of a number of network extensions to the west. None of the scenarios studied by Bord Gáis at that time showed a positive return on the investment involved and the company was not in a position to undertake the project in the absence of Exchequer or EU funds of £60 million. From a shareholder perspective, I must be satisfied that this latest proposal is in line with normal commercial criteria for the construction of gas pipelines. BGE must be able to support such a project, taking account of its current business plan and opportunities for its future development as a best practice gas utility. A project of this magnitude would have to be examined in detail before approval could be given.
The proposed pipeline must also be examined in the context of the changing regulatory environment for the natural gas industry. The industry in Ireland and across the member states of the EU is in a state of change following the entry into force of the EU gas directive. All member states, including Ireland, are currently in the process of making the relevant changes to the domestic legislation governing their national gas industries in order to comply with the provisions of this directive.
Liberalisation of the market offers possibilities for new players to become involved. We have been to the fore in opening up our natural gas market to competition. Already, players other than BGE are entitled to become involved in the supply of natural gas to the competitive section of the market and to build their own pipelines. Some have already expressed an interest in doing so. In the newly liberalised gas market BGE will be treated in the same manner as any other player. It is in this wider context that the application by BGE will be considered.
Another potentially influential development is the gas find in the Corrib field off the Mayo coast. While the prospects for the field look promising, the consortium involved in the exploration of the field has indicated that further appraisals will have to be carried out before a decision can be taken on whether the field is to be developed commercially. When the board of Enterprise Oil visited Ireland recently, I urged it to clarify its intentions in this regard as quickly as possible. If the field is developed commercially, it will have a significant impact on the natural gas industry. It is prudent that we await developments in the Corrib field, but we cannot wait indefinitely. In the meantime I will ask BGE to clarify the details of its pipeline proposal. I must be convinced that such a project could stand up on commercial grounds.
I hope I have clarified the issue for the Senator. I will examine this application from BGE in depth and I will give my approval for the project to proceed only if I am satisfied that it is a commercially viable proposal and if I think it will benefit the Irish natural gas industry and gas consumers.
The Seanad adjourned at 6.10 p.m. until 10.30 a.m. on Wednesday, 17 November 1999.