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Shell producing Irish natural gas after decade of project delays

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December 30, 2015 | By Collin Eaton

HOUSTON — Royal Dutch Shell has started extracting natural gas off the coast of Ireland after more than a decade of project delays and an estimated $3.1 billion in unexpected cost overruns.

The Anglo-Dutch oil major on Wednesday said it aims to pump enough gas from the Corrib gas field to quench as much as 60 percent of Ireland’s demand for gas. It’s the latest move by Shell to cement its place among the world’s biggest gas suppliers, coming eight months after the company agreed to a $53 billion deal to buy British liquefied natural gas firm BG Group.

“Delivering gas from Corrib will bring many long term benefits to the Irish economy and consumers,” Andy Brown, Shell’s upstream international director, said in a written statement. The Corrib gas field, some 51 miles north of Ireland in more than 1,100 feet of water, will likely produce 260 million standard cubic feet of natural gas a day at its peak. That’s the same as about 45,000 barrels of oil equivalent a day.

Irish regulators and local protesters had stalled the project for years, calling for Shell to redesign key pieces of the project’s infrastructure, including an onshore pipeline that Shell eventually rerouted three times further away from the nearest occupied houses than it had initially planned in 2002.

Shell spent hundreds of millions burrowing a 3-mile tunnel for its pipeline through Ireland’s Sruwaddacon Bay, and overall, project costs have ballooned over the years from an initial $873 million to $3.93 billion, according to the Irish Examiner. Shell got past its final regulatory hurdle this week when Irish officials gave it permission to operate the pipeline.

In a 2012 report, the International Energy Agency warned that the long delays in bringing the Corrib gas field online was crimping the oil industry’s interest in spending exploration and production dollars in Ireland, which got nearly all of its gas supplies “through a single transit point in Scotland.”

“Ireland is thus vulnerable to a gas supply disruption, and would benefit significantly if there were a greater diversification and flexibility of supply in terms of entry points and sources” the IEA said, adding that the Corrib was the most important project for Ireland’s energy security.

The Corrib field was originally discovered in 1996. Shell said it will support 175 jobs to operate the facilities there over the next two decades.

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