Noel Dempsey (Meath, Fianna Fail)

Up to 1987, when the present terms were introduced, Ireland had made one commercial find. Over the same period, Norway had made 60 commercial finds and, on average, each was significantly larger than Kinsale. A comparison of success rates for exploration drilling carried out for my Department in 2003 showed that the UK and Norway had 1 in 8 and 1 in 10 success rates respectively between 1982 and 2001. In the same period, Ireland had a 1 in 20 success rate.

This lack of success has been reflected in past difficulties in sustaining exploration effort. For example, in January 1999, there were a total of 25 offshore exploration licences, including 19 frontier. Today, there are 13 offshore exploration licences, including 11 frontier. The conclusion is that the industry does not regard attractive terms as compensating for the lack of prospectivity. This conclusion is supported by the facts that all the eight frontier licences which were issued in the 1995 Porcupine round are now relinquished. All but one of the 11 licences issued in the 1997 Rockall round are now relinquished.

In addition, the cost of drilling exploratory wells in Irish waters is high because environmental factors require the use of deep water drilling rigs, which are much more expensive to operate than shallow water rigs. In the North Sea, the average water depth is less than 200 metres and an exploration well costs approximately €8 million. The last two exploration wells drilled offshore Ireland were in 1,500 metres of water and cost in the region of €20 million each.

The relative lack of existing infrastructure for handling these resources means the cost of exploiting the fields, should finds be made, is much higher. The rationale behind the current terms is to encourage exploration in the Irish offshore. Despite the fact some people view them as excessively generous, there have been very low levels of exploration in the past 30 years and much of our offshore remains underexplored. Some Deputies seem to have a whole range of information that not even the oil companies had. The Department would welcome the opportunity to get the information, seismic data and so on that Deputy Cowley has, but that——

See this speech in context