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My pipe dream that was a big nightmare

THE SUNDAY TIMES

Shell chief Terry Nolan is confident that despite being a decade late and three times over budget, Corrib will win over its critics

Mark Paul
Published: 20 June 2010

Like another oil firm in big trouble at the moment, Shell caused a lot of upset, which Nolan accepts. ‘If I was doing it all again, we would put more effort into understanding the community,’ he says

Terry Nolan, the managing director of Shell Exploration and Production (E&P) Ireland, picks up the microphone and addresses the 700 construction workers gathered at Shell’s Bellanaboy gas refinery, near Rossport on the wild northern Mayo coast.

The refinery will serve the contentious Corrib gas field, located 83km out in the Atlantic Ocean.

With the near-complete installation looming in the background, Nolan thanks the workers for their safety record. They have clocked up almost 1.4m man hours since their last serious incident.

Speech finished, Nolan joins the front, facing a photographer perched on a cherry picker. The Corrib class of 2010 beams on cue, posing like one big, happy family.

If only everyone in Rossport was so happy.

Nolan, a Carlow-born mechanical engineer, is in charge of delivering the most controversial piece of infrastructure in the history of the state.

It has become a lightning rod for years of protests by worried locals, anti-corporate demonstrators and eco-warriors. The recent BP oil spill debacle in America has added spice to the opposition.

Since February, two protesters have languished in Castlerea prison, emulating the Rossport Five, the local anti-Corrib objectors who were jailed in 2005 after obstructing the development.

Corrib is one of the biggest investments ever made in the west of Ireland and, despite the trouble, Nolan says he is determined to finish the job. “I don’t foresee any circumstances where this project is not going to go ahead,” he said.

When the pipeline is completed by 2013, Corrib will have cost three times its original €800m budget and will be a decade late. “It is clearly taking longer than any of us anticipated, but we are absolutely committed. Nothing will stop us finishing it.”

Weary of years of bad publicity over the protests, he is keen to talk up the project’s economic significance. Corrib is a big deal for the country. “We’re proud of what we’re doing here,” said Nolan.

“Clearly we haven’t got everything right. But Corrib will be good for everyone once we get it finished.”

Nolan was parachuted in as the deputy managing director under the Englishman Andy Pyle four years ago, a year after the Rossport Five protests blew up in Shell’s face. He took over the top job two years ago, with observers musing it was no coincidence that an Irishman landed the role.

The company had become sensitive to criticism that it was not listening to the concerns of locals, who wanted the refinery built out at sea. Shell says the economics of Corrib would collapse with an offshore refinery.

Shell owns 45% of the project, which it acquired as part of Royal Dutch Shell’s buyout of Britain’s Enterprise Oil in 2002, but suffers 100% of the grief. Statoil owns 36.5%, with Vermilion Energy Trust holding 18.5%.

Collectively, the three are known as the Corrib Partners, but Shell is the project’s sole developer and operator.

Enterprise first discovered Corrib in 1996. In the past five years, Shell E&P’s parent has pumped €575m of equity into the company. The official line is that the Corrib field holds less than one trillion cubic feet of gas, which, at today’s prices, would be worth less than $5 billion (€4 billion). With corporation tax at 25% and years of reputational damage caused by the protests, it hardly seems worth the bother. Campaigners believe there is much more gas underfoot.

A report by Goodbody stockbrokers, commissioned by the partners, estimated Corrib will contribute around €3 billion to Ireland’s economy over its lifespan, supplying 60% of the country’s gas needs at peak production.

The project employed 1,500 at the height of the refinery’s construction, but most of the remaining 700 workers will finish in the next few months.

The 83km offshore pipeline from the gas field was completed last year, and the refinery is 95% complete. Testing at the plant should be completed by this autumn.

All that remains is for Shell to build the contentious onshore pipeline segment, which will link the offshore pipe’s landfall site at a beach near Rossport with the refinery 8km inland.

Shell is waiting for permission from An Bord Pleanala (ABP) to tunnel it underneath the protected Sruwaddacon Bay, after the planning authority ordered it to come up with a new route.

It is the third time Shell has moved the online pipe route after locals protested about its proximity to their homes. Nolan says he was “surprised and disappointed” by the ABP decision, which will delay the project by another year and add €100m to a final bill that could reach €2.5 billion.

“The pipe is only small at 8km, but it is now the critical thing and it all depends on getting the permits and consents,” said Nolan. “We have put a huge effort into getting a positive response from ABP. There’s always uncertainty until we have all the permits in place. But we would hope to get a decision before the end of the year, with the first gas between 2012 and 2013.”

Nolan believes the successful delivery of Corrib will be the catalyst for further oil and gas drilling off Ireland’s western seaboard, which has been a graveyard for exploration over the past 20 years.

“Over the past five or 10 years, Ireland has probably averaged one exploration well a year. That’s not enough. The low hit rate and the delays at Corrib have not been a great advertisement.”

As the west coast exploration pioneer, Shell has plenty of arrows in its hat — but it has not been put off. The company recently started drilling for more gas on another site near the Corrib field, which it could hook up to the existing infrastructure for an estimated €100m if it strikes gas.

“I want to get Corrib finished first,” said Nolan. “It is early days yet with the new site — we have to drill the well. Nothing has been found yet.”

There is no rule that says the Corrib partners have to sell their gas to Bord Gais. The gas will be sold at full market rate, so prices will not come down for customers here.

“We each have our share of the gas and neither of us knows what the other partner will do with theirs. But as far as I am concerned, the gas will remain in Ireland. Ireland imports 95% of its gas now, so why would anybody want to export any of the Corrib find?”

Nolan, a 30 year Shell veteran who has worked all over the world with the oil and gas major, admits that Shell made a hash of its early dealings with the locals, whose passions were first stirred when Enterprise tried to drive home planning permission for the refinery before it sold out to Shell.

Seeking the jailing of the Rossport Five was a ham-fisted PR disaster, and the company has never really recovered its battered reputation in the eyes of many.

“In hindsight, you look back and have to ask did we focus enough on bringing benefits to the local area,” said Nolan. “If I was doing it all over again, we would put much more effort into understanding the local community.”

To address the “hearts and minds” issue, Shell forced its contractors to hire more local people, and has set aside €5m for local development projects. It has spent €14m on upgrading local roads and also donates money to local worthy causes.

Before Nolan’s arrival, Shell’s local headquarters were a cramped, low-key building in the nearby town of Belmullet, reinforcing the view among locals that the company was not committed to the area. Nolan moved Shell into a new high-profile office building in the town, boosting its profile among residents.

As for the anti-capitalists who have set up a year-round camp near the pipeline, Nolan says the company’s door “is always open” for talks. He probably should not hold his breath, though.

“Completing Corrib is critical to Ireland’s reputation as a place that can deliver major infrastructural projects,” said Nolan. “In the UK or Norway, it would have been delivered years ago. It’s time to move it to completion and bring this much-needed gas ashore.”

He sounds hopeful, but in the oil and gas business, nothing should be taken for granted. Just ask BP.

The life of Terry Nolan

VITAL STATISTICS Age: 57 Home: Dublin Family: Married with four children Education: St Kieran’s College in Kilkenny, University College Dublin Favourite book: Catch-22 by Joseph Heller Favourite film: The Godfather

WORKING DAY I am in the office weekdays from 8am until 7pm and I work a half-day on Saturdays to clear my emails and prepare for the following week. I try to keep Sundays free. I spend one week a month in our Mayo office and the rest in Dublin.

DOWNTIME I like relaxing with my family. I also enjoy reading, playing golf, walking, swimming and watching sport on television.

SUNDAY TIMES ARTICLE

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