Royal Dutch Shell Plc  .com Rotating Header Image

Irish Times: Making Corrib’s gas pay

Published: Jul 06, 2007

The Corrib gas field is significant in Irish terms, containing enough to satisfy 60 per cent of the country’s demand, writes Claire Shoesmith.

While much has been written about the Corrib gas field, the involvement of oil giant Shell and the views of local objectors, little coverage has been given to what is actually going on 83km off the Mayo coast and what, in the long term, will be the impact of these activities on Ireland and its economy.

First discovered back in 1996, the Corrib gas field is estimated to contain about one trillion cubic ft of gas, enough to satisfy about 60 per cent of Ireland’s demand over the 15-year life of the field.

While small on a global scale, particularly for a multinational such as Shell, whose Irish arm, Shell E&P Ireland, is not only operating the field but also has a 45 per cent stake in it, Corrib is significant in Irish terms.

At about two-thirds of the size of the Kinsale Head gas field, it is hoped that, if production goes ahead as planned for the final quarter of 2009 (though this is doubtful given the delays with the proposed onshore pipeline), the Corrib gas field will not only reduce Ireland’s dependence on imports – only about 15 per cent of our gas is currently sourced here – but also ensure Ireland is no longer at the mercy of other less stable producing nations such as Russia, something that is particularly important for a nation that uses gas to generate more than half of its electricity.

“The importance of Ireland generating its own gas supply cannot be emphasised enough,” says Fergus Cahill, head of the Irish Offshore Operators Association.

“Currently, we are very exposed to the whims of other gas-producing nations and this would secure our own supply.”

While no one familiar with the industry would dispute what Cahill says, some are also hoping for additional knock-on effects, believing that the successful production of gas from Corrib will help stimulate activity in other offshore areas of Ireland.

Our record is poor, with only four gas fields being declared commercial in more than 35 years. This compares with 300 producing oil and gas fields in Britain and 62 in Norway.

As for Shell, the oil and gas giant behind the Corrib field following its takeover of Enterprise Oil in 2002, there have been many accusations of a large multinational taking our resources.

While there is no doubt that Shell and its partners, Statoil (which holds a 36.5 per cent stake) and Marathon (18.5 per cent), are extracting gas from Irish waters, they were awarded a contract by the Government to do just this and they note they are paying double the rate of corporation tax of other Irish-based companies for the privilege.

Under the current exploration regime, if this consortium was not involved, then someone else would be. The drilling process, which is 60 per cent complete, is costing Shell between 300,000 and 350,000 a day, with each well coming in at as much as 50 million.

Over the last 18 months, spending on drilling-related activities alone has come to 125 million and the total estimated cost of the whole project is about 1.5 billion, a figure that has increased significantly as a result of the delays caused by the local objections.

This compares with an estimated value of the gas contained within the field of 2 billion and, according to industry sources, gives Shell a much lower margin than in most of its other projects.

Given the vast amounts of negative publicity Shell has received as a result of local concerns relating to the location of the gas pipeline and terminal at Bellanaboy, Co Mayo, and the loss of almost 50 million recorded by Shell E&P Ireland in 2005, several commentators are quick to acknowledge that, had Shell known what was coming down the line, it wouldn’t have got involved. Pulling out at this stage, however, is out of the question.

Whatever one’s personal view of Shell and gas, there is no questioning the economic case for Corrib. And, the industry argues, unless we want to remain at the mercy of world leaders such as Vladimir Putin, the sooner the Corrib field comes on stream the better for Ireland.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Irish Times: Making Corrib’s gas pay”

Leave a Comment

%d bloggers like this: