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€800m pumped into Irish pipeline project

By: 
Jamie Smyth - Financial Times
A consortium led by Royal Dutch Shell will invest a further €800m to bring the long-delayed Corrib gas field off the west coast of Ireland into production by 2014.

The project, which has been dogged by planning delays and local protests, will have cost Corrib Gas Partners – Shell, Statoil and Vermilion Energy – €3bn by the time the first gas is piped onshore. In the late 1990s construction costs were estimated at €800m and the first Corrib gas was expected to flow onshore by 2009.

“It has definitely taken much longer than we had expected. It is important for all the partners to get this done,” Michael Crothers, managing director of Shell E&P Ireland, said on Monday.

The Corrib gas field, which was discovered in 1996, lies 83km off Ireland’s west coast and is estimated to contain almost 1tn cu ft of gas. When it reaches peak production the field is expected to supply 60 per cent of Ireland’s total natural gas requirements. But vociferous local opposition to the project, which involves the construction of an onshore gas terminal and a 4.9km tunnel for a pipeline in a scenic area in County Mayo, has hampered the project.

Mr Crothers said Shell could have done a better job of engaging with the local community when it started working on the project in 2002. But he said in the past five years the company had done a much better job on this. He said the community was now “largely behind the project” because of the investment and jobs it is creating in the area.

“The project is making a big impact on the community in Mayo. The recession has largely bypassed Mayo due to the investments we are making,” said Mr Crothers.

An economic analysis of the project undertaken by Goodbody Economic Consultants, and published by Shell on Monday, says the additional €800m investment will sustain 705 direct full-time jobs between now and 2014. The report estimates that the project’s total contribution to Ireland’s gross domestic product over its 15-20 year lifespan will be more than €6bn in capital investment, wages and taxes.

Some local campaigners claim the proposed onshore pipeline carrying gas poses a risk to the community and have engaged in numerous protests against the project. The demonstrations led to the imprisonment of several campaigners and deeply divided the local community in one of the most picturesque parts of Ireland.

The Irish government is concerned that the delays and extra costs related to the protests over Corrib have damaged its reputation as a place to explore for oil and gas. A recent exploration licensing round failed to attract a single bid from oil majors such as Royal Dutch Shell and ExxonMobil.

Mr Crothers said Shell had not ruled out becoming involved in future exploration projects in Ireland but said its immediate concern was to develop Corrib. He said he welcomed recent moves by the government to streamline planning and the development process for oil and gas projects.

Posted Date: 
14 February 2012