Dáil debates

Tuesday, 23 February 2010

Petroleum (Exploration and Extraction) Safety Bill 2010 [Seanad]: Second Stage.

 

5:00 pm

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

I move: "That the Bill be now read a Second Time."

I am pleased to introduce the Petroleum (Exploration and Extraction) Safety Bill 2010 for the consideration of this House. I believe it is appropriate that we address an important issue such as the regulation of petroleum activities with respect to public safety with both clarity and purpose. It is also important that we should have confidence in our public administration operating efficiently and in the public interest at all times.

While this is a relatively short Bill, it will provide for an important strengthening of the overall regulatory framework governing exploration for and production of oil and gas. The Bill is a key part of the Government's priority legislative programme. At present the Department of Communications, Energy and Natural Resources is responsible both for licensing petroleum exploration and extraction activities and regulating those activities from a safety perspective. This Bill proposes to confer responsibility on the Commission for Energy Regulation, CER, for the regulatory function for safety in the case of upstream petroleum activities and the associated infrastructure.

In conferring this new responsibility on the commission, this Bill gives effect to a key recommendation of the report produced by Advantica following its safety review of the Corrib Gas pipeline. Advantica recommended that a new risk assessment based safety framework with respect to gas pipelines, in line with best international practice, should be developed and implemented in Ireland. The risk assessment approach is the commonly accepted methodology for managing safety worldwide and is reflective of the approach taken in the dangerous substances and chemicals legislation.

The Bill expands on this concept to provide that petroleum activities generally would be governed by the new safety framework. The safety framework will in effect be a manual setting out the nature and scope of the petroleum activities and associated infrastructure that will be designated and subsequently regulated by the commission. It will include the systems and procedures to be operated by the commission in designating and regulating such activities and associated infrastructure, including an ongoing system for audit and inspection. It is envisaged that the framework will cover a wide range of activities including the construction, operation, maintenance, modification and decommissioning of petroleum infrastructure.

Before turning to the detail of the Bill, I should like to outline how this new function sits well with the existing responsibilities of the commission. Established as the independent regulatory body with responsibility for electricity under the Electricity Regulation Act 1999, the commission's powers and responsibilities were extended under the Gas (Interim) (Regulation) Act 2002 to incorporate the regulation of natural gas. These powers and responsibilities were further extended by the Energy (Miscellaneous Provisions) Act, 2006 and the Electricity Regulation (Amendment) (Single Electricity Market) Act 2007 with respect to the commission's participation in the development of an all-island energy market.

The 2006 Act extended the commission's regulatory role with regard to the operation, maintenance and development of gas transmission and distribution networks. That Act conferred responsibility on the commission for the regulation of safety for the transmission and distribution of downstream gas. This Bill proposes to consolidate the commission's role as the regulator for gas safety by conferring it with responsibility for the regulation of safety in the case of upstream petroleum activities and the associated infrastructure. Given its already wide-ranging knowledge and experience of both the gas and electricity markets and its statutory responsibility to carry out its activities in a fair and impartial fashion, I believe that the commission is well placed to take on the additional functions and responsibilities proposed by this Bill.

I shall now turn to the detail of the Bill. For the convenience of the House, a detailed explanatory memorandum has been published which provides a synopsis of the Bill's provisions. There are only four sections in the Bill. Section 3 inserts a new Part II into the Electricity Regulation Act 1999. Part II now effectively comprises a new section 13, which consists of 28 sections. Section 13A is the definitions section. Section 13B provides that the provisions of the Bill will not affect any other existing statutory obligation with respect to petroleum undertakings. Section 13C sets out the type of undertakings and activities to be governed by the new safety framework to be established and operated by the commission.

Section 13D provides for the designation by the commission of the specific petroleum activities and associated infrastructure to be regulated. There is a very wide range of activities and infrastructure, both offshore and onshore, which potentially could be required to conform to the new safety regime. Such activities may include the drilling of wells for the purposes of exploration and extraction of petroleum, transmission of gas by sub-sea and onshore pipelines and gas processing terminals. The criteria to be considered in determining designation will include the nature of the activity and the type of infrastructure associated with it, together with an assessment of the potential risks of engaging in such an activity and the safety measures required to reduce such risks.

The extent to which an activity is regulated by other legislation will be also a factor. Prior to the designation of any activity, the commission will consult with specified bodies, including the Health and Safety Authority, to ensure that any potential overlap in functions is managed in an effective and proper manner.

While the role of the commission will be to regulate with respect to public safety, the Health and Safety Authority is the national body in Ireland with responsibility for securing health and safety at work. The Health and Safety Authority responsibilities cover every type of workplace and every type of work in both the public and private sectors. The functions and responsibilities of the HSA will remain unaffected by the provisions of this Bill and the commission and the HSA will undertake their respective statutory obligations in parallel.

The National Standards Authority of Ireland, NSAI, will be also a mandatory consultee. The NSAI is responsible for the development of Irish standards, representing Irish interests in the work of the European and international standards bodies such as CEN, the European Committee for Standardization and ISO, International Organization for Standardization, and for the publication of Irish standards.

In effect the NSAI certification creates, maintains and promotes recognised standards. To ensure there is clarity with respect to the appropriate standards applicable to the petroleum activities and infrastructure that will be designated by the commission, the NSAI will create a petroleum exploration and extraction standards committee in accordance with section 10 of the NSAI Act 1996. The purpose of this consultative committee will be to advise the authority in respect of the need for, and the content of, standardisation in the field of petroleum exploration and extraction. The commission will liaise with the NSAI, when it is setting out in the safety framework the appropriate code or standard with respect to safety, to which all petroleum undertakings must conform when carrying out each designated activity. Before designating the activities to be regulated, the commission will provide an opportunity for interested individuals, organisations and other bodies to provide their views. In addition to the HSA and the NSAI, the Bill specifically provides that the commission must consult with the Environmental Protection Agency, the Maritime Safety Directorate and the Irish Aviation Authority.

Section 13E makes it illegal for petroleum undertakings to carry on any designated activity without having been issued with a safety permit by the commission. Section 13F ensures that it will be a condition of all licences issued by my Department that such undertakings hold a safety permit. This will ensure compliance by all petroleum undertakings, whether they are existing or new licensees, with the requirements of the safety framework, within the statutory timeframes proposed by the Bill.

Two of the amendments tabled in the Seanad by the Minister, Deputy Eamon Ryan, dealt with the question of public access to information. This will result in greater openness and transparency and will help generate public confidence in regulatory processes. The Bill provides for access by members of the public to information contained in safety cases and safety permits. The Bill also provides for participation by interested parties and by the general public in the development of the safety framework itself and of the guidelines that will set out what should be included in a safety case.

Section 13G provides for an enhanced role for the Commission for Energy Regulation in that it establishes as an objective of the commission that it should foster and encourage safety with regard to the carrying on of petroleum activities. The actual functions of the commission with regard to its new regulatory role are established in section 13H. While the key function is to establish and implement the safety framework, other specific functions place obligations on the commission to investigate and report on petroleum incidents, to monitor and enforce compliance with the requirements of the framework and to grant safety permits where it is satisfied with the safety management system proposed by the petroleum undertaking. The matters to be considered by the commission in carrying out its functions are also set out. They include minimising the potential for overlap or duplication of effort. This will be achieved by the commission having regard to where similar functions are already performed by other bodies and by co-operating and consulting with the bodies specified in the Bill.

Section 13I expressly sets out what is required of the commission in establishing and implementing the safety framework, including the information to be contained in the framework document. It is envisaged that the framework document shall contain information in respect of the following: the nature and scope of the petroleum activities to be regulated; the systems and procedures to be operated by the commission; a list of designated petroleum activities and associated infrastructure and the appropriate code or standard with regard to safety relevant to each; the procedures for assessment by the commission of a safety case application; and a system for the ongoing monitoring of compliance of petroleum undertakings through audits and inspections. In deciding what other matters may feature in the framework, the commission may consider such issues as technological developments, industry best practice, reviews of safety codes and standards, or submissions or recommendations made by interested parties. In the interests of transparency, the commission is also required to report annually to the Minister as regards the functioning of the safety framework.

The implementation of the framework in compliance with section 13M will mean in practical terms that within a specified statutory period, a petroleum undertaking will be required to submit a safety case application to the commission with respect to any designated petroleum activity it is carrying on or it proposes to carry on subsequent to the enactment of the Bill. This section addresses the fact that the new regime will apply to both existing and to new licensees. The use of a safety case regime is a standard feature in the regulation of safety-critical industries, including rail, nuclear and chemical. It is well established and has been used in the offshore oil and gas sector in the United Kingdom and Australia for the past 20 years. In the UK, the Health and Safety Executive is responsible for the safety regulation of the offshore oil and gas sector. Undertakings responsible for offshore oil and gas installations are required to submit safety cases to the Health and Safety Executive for acceptance as a condition of operating in UK waters. In Australia, the National Offshore Petroleum Safety Authority is responsible for the regulation of offshore safety, where the requirement is to have an accepted safety case for each offshore petroleum facility and for the facility operator to act in accordance with the safety case.

In Ireland, the commission has already successfully implemented a safety case regime in discharging its downstream gas safety responsibilities under the natural gas safety regulatory framework, provided for under the Energy (Miscellaneous Provisions) Act 2006, under which, similarly, if a safety case application is approved by the commission, a safety permit will be issued to the petroleum undertaking.

Section 13L provides that the commission, following consultation with specified bodies, will be required to draw up and publish safety case guidelines which will set out the appropriate content of a safety case. This may include the specification of the appropriate technical design principles and safety standards to be achieved, together with the procedures to be followed in the submission of a safety case for approval to the commission. This will provide guidance for petroleum undertakings in respect of what is required of them in submitting a safety case. This requirement will make it illegal for petroleum undertakings to continue to carry out a designated activity without having submitted their safety case within the prescribed timeframe.

The Commission will approve a safety case pursuant to section 13P, or a revised safety case pursuant to section 13N, only for the purpose of issuing a safety permit where the information in the safety case complies with the requirements of the safety case guidelines. The commission must also satisfy itself that the petroleum undertaking is capable of implementing the safety management system described in the safety case.

Using similar provisions governing other functions of the commission, the Minister may, pursuant to section 13J, in the interest of proper and effective regulation, give written directions to the commission in connection with the exercise of its statutory functions. A written direction could be given if, for example, the safety framework was not published within the specified timeframe, or where measures might need to be taken arising from reports on major accidents, or where the Minister considers that it would be in the public interest that the framework be reviewed or amended. While petroleum undertakings must comply with the specific requirements of the safety framework, section 13K of the Bill also places a general duty on petroleum undertakings with respect to reducing risks with regard to safety to a level that is as low as is reasonably practicable. Section 13O imposes an obligation on petroleum undertakings to carry out designated activities in conformance with their approved safety case.

Section 13P sets out the basis upon which the commission may approve a safety case and issue a safety permit. A key consideration for the commission will be the capability of the petroleum undertaking to implement the safety management system described in its safety case.

Section 13Q provides the commission with a power to refuse to grant a safety permit or to revoke a safety permit. It sets out the basis for taking such decisions and the process that the commission must follow. Revocation of a safety permit by the commission, which would prevent the continuation of a particular activity, might occur if, for example, an undertaking were not complying with the conditions of its safety permit. This section also provides for a right of appeal by a petroleum undertaking to the High Court where a permit is refused or revoked.

Sections 13S, 13T, 13U, 13V, 13W and 13X make provision for what should happen in the event of a petroleum incident occurring. A petroleum incident is defined for the purposes of this Bill as an incident resulting in loss of life, personal injury or damage to property not belonging to the undertaking. There is an obligation on the undertaking to report such an incident and the steps the commission is subsequently required to take, including furnishing a report to the Minister, are also set out.

The purpose of this Bill is to promote risk assessment and risk management. To assist the commission in ensuring full compliance in this regard, it has the power to appoint petroleum safety officers, as required, to investigate any circumstance it deems appropriate. The routine functions of the petroleum safety officer are clearly set out in the Bill. A significant power proposed is that in the event that a petroleum safety officer perceives there may be imminent serious danger in regard to a designated activity, he can, pursuant to section 13AB, request that a direction be issued by the commission to interrupt the activity. Failure by a petroleum undertaking to comply with such a direction may result in an ex parte application to the High Court for an order to prohibit the activity in question.

The commission will for the most part monitor compliance through a system of inspection and monitoring and in the event that it considers that an undertaking is not complying with its approved safety case, it can request that it submit an improvement plan. Should the improvement plan not be submitted, or fail to satisfy the concerns of the commission, a prohibition notice may be issued. This would suspend the carrying on of the activity in question until the commission could be satisfied that the risk has been reduced to an acceptable level. In the interests of fairness and transparency, either of these actions by the commission may also be appealed to the High Court.

The Bill provides for the cost of establishing and implementing this new safety regime, which will be funded by way of an annual levy on the petroleum industry and the imposition of administration charges with respect to consideration by the commission of safety case applications and the issuance of safety permits. The requirement with respect to transparent accounting procedures in this regard is also clearly established.

This Bill is an important measure in further strengthening the overarching regulatory framework governing exploration for and the production of oil and gas. By focusing on safety, this Bill will, on enactment, have considerable benefits for all existing and potential petroleum undertakings in Ireland. It will provide greater clarity and robustness of process. It will establish the appropriate code or standard with respect to safety relevant to each designated activity to be regulated by the commission. It will also provide for the issue of safety permits by the commission which will enable petroleum undertakings to carry on their business in conformity with their approved safety case.

I look forward in particular to working closely with the commission on ensuring the speedy implementation of the Bill's various provisions following enactment. I hope the outline I have provided of the provisions of this Bill has been of assistance to Opposition Members. I look forward to listening carefully to the views of Members on this important Bill and to their assistance in progressing it into law.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context

I welcome this legislation. It has passed through the Seanad where there have been some valid concerns raised, particularly on public consultation on the making of a safety case.

This legislation is essentially about learning lessons from the mistakes made in trying to bring gas ashore from the Corrib field.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

I agree.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context

It is appropriate that we, as legislators and policy-makers, try to respond to the mistakes that have clearly been made in that ongoing saga, in respect of which everybody is unhappy. The developers are very frustrated and have spent huge sums of money trying to push their project forward. The local community felt betrayed at times and is very angry. Individuals have gone to prison. In many ways, it is a case study on how not to develop this type of infrastructure. As a result of the mistakes made on all sides, Ireland has developed an unfortunate reputation abroad as a country in which it is very difficult to turn exploration to production, or as a country in which it is difficult to bring oil, gas or other natural resources ashore. This is regrettable.

Ireland has a huge sea area, encompassing 40,000 square miles. There is much encouraging evidence that there is potential for finding very significant quantities of oil and gas in the Irish sea-bed. The numbers of expressions of interest in spending the large sums required to exploit the resources indicate that many exploration companies have chosen to go elsewhere because of the difficulty they perceive to be associated with the development of projects in Ireland. It is ironic that despite much of the criticism of the Government, Minister and former Ministers, centring on their being far too lax with regard to licensing, and the accusations that the Government has not secured a sufficient dividend for the State from gas and oil exploration, expressions of interest in drilling offshore in Ireland are diminishing rather than increasing.

While it is important to continue to reflect on and review the appropriateness of our licensing arrangements in terms of getting a return for the State from a natural resource owned by the State, we must also ensure we provide an incentive for developers and exploration companies to spend the enormous sums of money required to find what natural resources may exist. It costs between $60 million and $70 million each time there is an exploration drill. This is a considerable amount. Those who make the case that the State should be doing the drilling and that private sector companies should not be allowed to come from abroad, potentially to exploit our natural resources, show a lack of understanding of the industry and of the capacity of the State to generate, in a State-owned or semi-State company, the required expertise in extremely expensive exploration work .

It is important that licensing arrangements, in terms of taxation and royalties, be kept under constant review to ensure we strike the right balance between obtaining a return from the State where there is a very valuable find and offering an incentive sufficient to ensure companies will come to Ireland and spend enormous sums of money in anticipation that they will make a very attractive return should they strike oil or gas in sufficient quantities. This is a simmering argument, particularly in the west. People ask, correctly, if we have the balance right to ensure that if there is a big find, the State will get the benefit or whether it is a case of a company coming from abroad, bringing its employees from abroad, and making huge profits from Irish resources. That is an ongoing debate we must continue to have in an honest manner. The issue is not as black and white as some of the critics of Government policy sometimes like to portray it.

With regard to the mistakes that were made with Corrib, first and foremost, the correct principle is that the licensing authority should be separated from the regulatory authority, rather than the Department trying to do everything from licensing to undertaking safety studies, monitoring and so forth. Certainly, international practice suggests there is much sense in separating the regulatory functions, relating to giving a safety permit to a developer who wishes to lay pipeline or to undertake exploration activity, from the Department, which is responsible for giving a licence for exploration in the first place. That separation is good and, from that point of view, the Minister is correct in principle in what he is attempting to do. That is my view at this stage unless I hear arguments to the contrary.

The Corrib field is an exciting discovery. Its estimated size is approximately 30 billion cu m of gas, which is about 70% of the size of the Kinsale field. The Kinsale field was originally discovered in 1973 and has been a huge contributor to the Irish economy in terms of security of gas supply. It also resulted in the opening of a gas pipeline infrastructure which probably would not have happened at that time without that discovery. There are the same opportunities with the Corrib field. Despite the mistakes that have been made and the upset caused in communities, I am a very strong supporter of the principle of bringing gas ashore from off the west coast as quickly and efficiently as possible.

Regardless of the royalties and taxation issues, Ireland is hugely exposed at present in terms of security of supply. The Irish economy effectively runs on gas. It is the most important fuel source in terms of electricity. We import 95% of our gas from the UK, which in turn imports all its gas from Russia and Norway, although the Norwegian resources are running out. The reality is that Ireland is at the end of a pipeline. Should international gas prices or gas reserves be affected, Ireland is hugely vulnerable in terms of electricity prices and the capacity to generate power in our power stations, the majority of which, certainly the modern ones, are driven on gas. What people must understand about Corrib is that it is not just a matter of how much money the State can make from the developers in terms of taxation but it is also about energy security and ensuring the Irish economy can continue to be fed with gas into the future. Energy security in Ireland is not given the type of political priority that is necessary. Ireland is the most exposed country in Europe and in the OECD in terms of reliance on imported fossil fuels, such as gas, oil and coal. The discovery in Corrib and, hopefully, other discoveries that will be brought ashore in the future under the new model, which will facilitate local communities in a more effective way than happened in the Corrib case, will reduce the exposure of this State to reliance on imported fossil fuel.

To return to the specific provisions in the Bill, the Minister is on the right track with regard to the principle of having a separate licensing authority and safety regulatory authority. In essence, the Bill asks the CER to do on the upstream infrastructure what it already does on the downstream infrastructure in terms of safety. When a developer decides to undertake an exploration project, be it offshore operations such as wells and sub-sea activity, offshore pipelines along the seabed or onshore pipelines going to a processing plant, that infrastructure is currently outside the responsibilities of the CER. We are changing that in the Bill. All the petroleum infrastructure, from the well upstream to further downstream, will be the responsibility of the CER to monitor and permit from a safety perspective.

The most important part of the Bill is section 13M, which requires anybody who wishes to undertake activities relating to petroleum exploration and provision to submit a safety case to the CER within six months of starting any work. This makes sense. Essentially, it is an extra permit that is required and which deals with safety. Obviously, processes such as an environmental impact statement, EIS, a licensing process and probably a planning process will be required. Having a safety case or safety permit process which the CER is responsible for designing and implementing will, I hope, reassure local communities that there is an independent regulator to monitor and decide on the safety of a proposal before any development takes place. That is a positive development.

However, the Minister has not catered for some matters with regard to putting together an application for a safety case. At this point, I thank the Minister's officials for taking the time to brief the Opposition spokespeople. It was very useful. They are not required to do it and I appreciated it. An issue that was raised in the Seanad and which we discussed in the briefing was the participation of the public in the preparation and improvement of the safety case. In other words, if we could rewind the clock and ask the developers in Corrib to start again under the new mechanisms we are putting in place, they would be required to approach the CER, put together a safety case from a safety point of view and seek approval for it from the CER under the guidelines that will be drawn up under the safety framework, which the CER has been asked to put together.

The Bill proposes that the developers will be able to put their safety case to the CER and ask it for its view as to whether it is sufficient, if it requires amendment, improvement or change and, if so, how the developers can do that. I expect the CER will take a very proactive approach and say, for example: "You are 75% there but we would need you to do X, Y or Z to improve your case before we can give approval." The problem is that there is no opportunity for the public to have an input at that stage. The Minister has made a conscious decision to allow the public to have an input when the CER is putting together the safety framework, which is a generalised framework and not site specific. There will be no public interest in that. Nobody from Mayo would have contributed to a generalised safety framework 15 years ago if the CER had been putting one together for future potential exploration in Ireland.

Local communities interact with regulatory or planning bodies only if it impacts on their environment. That is why it is necessary to allow for some public input into the safety case process before it is given approval and a permit is granted. I can understand the reticence and caution of the Minister on this issue because we do not want a long, drawn-out process with appeals, court challenges and so on which will create major delays when, ultimately, if one has a sound project which should proceed, we want to see that happen. There is a balance to be struck. Perhaps there could be a period of three weeks or a month for the public to make comments on the safety case, to ask questions and to have an opportunity to raise concerns. In many cases, communities will raise money to pay for experts, perhaps from abroad, to come in and test the safety case being considered by the CER. That is a good thing.

If there is one lesson we have learned from Corrib it is that we cannot allow conspiracy theories to develop or local communities to be under the impression that something is being hidden from them or that there are ulterior motives and they are being hoodwinked in some way or other. All of those feelings have been felt in communities in Mayo at various stages which has built further resentment and anger, and has resulted in the project getting stalled, demonstrations being held and all the rest. From a very early stage, in terms of safety concerns, there should be at least an opportunity for the public to observe, in a transparent way, what is happening, to see a safety case being put forward and how the CER considers it and to have an opportunity to make a comment if they wish to do so. Ultimately, the CER must make the decision.

It is up to the Minister whether he wants to include a provision in the Bill to allow for objections, or simply to allow for comment or observations. He may decide to do what he is currently doing, that is, offering the public no input into the safety permit application process, or whatever it is called. I ask the Minister and his officials to examine the matter between now and Committee Stage and try to find a way to ensure we can streamline the process, while at the same time ensuring we do not allow the public to develop a resentment on the back of not being given the information or facts, in particular the safety elements, of a project which will impact on the local community. If we could do that it would be a good day's work. Otherwise, we are not learning the lessons from Corrib. We should not try to put in a slick process and ask people to trust the CER. That is what we are saying. We are telling people we will not show them the safety case application because we need the CER and the company involved to figure it out first and when they produce a safety permit which has been approved, the public can see the finished product. That is not good enough. The Bill should set time limits.

I am not sure if there should be a long appeals process or an appeals process at all. However, we should let local communities see the detail at each stage. When a developer or exploration company is putting its safety case to the CER for permission to proceed, the public should be allowed to view the case. If they are sufficiently organised and financed to be able to have their own expertise to comment on the case, so be it. If they want to comment, there should be a facility for them to get answers. When a company then starts digging trenches in order to lay pipelines through people's fields, the public at least know they have had the opportunity to participate in the safety audit or application process for the project concerned. That is the main issue which is of concern to me on Second Stage. We can examine individual sections on Committee Stage.

I wish to make some points regarding staffing implications. The Bill asks the CER to do a considerable job. It asks the CER to work with the Health and Safety Authority, the EPA and other Government agencies, authorities and the Department during the construction and application process when a safety case is made and a permit is required. After that, if there is an accident the CER will be expected to investigate it and produce a report for the Minister. There are all sorts of safety monitoring procedures which will need to be put in place when gas comes ashore at high volumes and pressures, which is a significant responsibility to pass on to the CER. It will need significant staff to be able to deal with that.

If we are increasing staff levels in the CER, are we making the corresponding staff reductions within the Department? If we are transferring one responsibility from the Department to the CER, that should happen. Are we taking on new people and retaining all the staff who did this work in the Department in the past? From a public finance point of view, we need to ensure we are getting value for money. Most importantly, we need to ensure the CER is given the resources and staff, even in these tight times, to do this job properly because significant pieces of infrastructure are involved which can be dangerous if a proper safety framework which is functioning, monitored and enforced by the CER is not in place. I wish to raise that flag at this stage because there is no point in transferring responsibilities to the CER if we do not give it the capacity to be able to the job comprehensively. It does not currently have the capacity, staff or expertise to be able to do the job.

I will return to what I said at the start of my contribution. This Bill is about learning lessons from a fiasco which happened off the west coast, where we have a very valuable and important resource for the Irish economy which has not been brought ashore in a timely manner because of repeated mistakes, in terms of how the concerns of the community were dealt with and a series of other issues. I hope the next time there is a major find off the south, west or east coasts and we apply new legislation we will be able to allay the fears of local communities in order that we can bring gas, oil, coal or power ashore in a way which treats local concerns with the respect they deserve, while at the same time doing a job for the country, in terms of national priorities regarding energy security and the very important issues which revolve around the new role for the CER in this process.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
Link to this: Individually | In context

I welcome the opportunity to discuss legislation to ensure a modern and transparent safety regime for petroleum and gas exploration. It is an area that attracts great controversy, or has done. Local communities also express genuine fears about safety issues. It is not the only area where those kinds of concerns are expressed but in the Corrib dispute they were especially acute. Regardless of one's perspective on that dispute, it is fair to say this legislation flows from the fact that there was an ongoing dispute with such a concentration of concerns, issues raised, fears expressed and conflict of views and approaches. The legislation we see now came out of that experience.

It is a necessary measure. The question that comes to mind is why it has taken us until now, and only after a conflict, to do this and bring about a change in legislation. There seems to be a lacuna that was not addressed and which came into sharp focus only because of the Corrib dispute. One might look at the Advantica report which considered the safety issues, again because of the unrest and concerns that had been expressed. It states:

Proper consideration was given to safety issues in the selection process for the preferred design option and the locations of the landfall pipeline terminal. Quantified risk assessment techniques were used to evaluate the levels of risk to the public and deemed to be acceptable according to recognised and relevant international criteria. However, there appears to be no formal framework in Ireland for decisions on the acceptability of different levels of risk which should be in place to enable potential developers to gauge whether or not a proposed project is likely to be permitted and to ensure consistency of decisions made on safety issues. We recommend that consideration should be given by the Irish Government to establishing a risk-based framework for decisions on proposed and existing major hazard pipelines and related infrastructure to ensure transparency and consistency of the decision making process.

That is central to the work that went into preparing this legislation. If it is not fully transparent now I hope that by the end of the work we do it will be as transparent as it can possibly be, allowing for commercial sensitivities. I note that in 2006 when the report was published the previous Minister accepted the recommendation that he place long-term responsibility for safety for upstream projects such as the Corrib project with the commissioner for energy regulation, CER. That is what we are doing now. As Deputy Coveney stated, it makes sense to transfer responsibility for regulating upstream as well downstream activities to the CER. I have no doubt it will have the full support of the House. Currently, this is the Minister's responsibility but I understand it is not defined properly in law.

I am very thankful to the departmental officials for the briefing time they gave me and other Members of the Opposition. It is very valuable to have that kind of expertise available to us. The Bill provides for a comprehensive range of activities or, at least, oversight of a comprehensive range of activities, from the drilling of wells to the processing terminals. The idea is to have standards applied across the board.

I do not have a problem with the fact that the CER will be responsible for this and have this role, rather I welcome it. However, I urge caution in regard to how this will work out in practice. There is a fashion to move responsibilities out of Departments into bodies that are not departmental or quangos. The regulatory power and authority in regard to this matter is the CER but, realistically, the CER will not be able to carry out this new work without acquiring additional resources and staff.

Recently we debated the Broadcasting Act which set up a new broadcasting authority and I believe there is a salutary lesson there. It is the kind of lesson which, to a very graphic degree, was given us by what went on in FÁS. However, at a much more modest level it shows the inevitability of budgets going up when the State no longer has to pay them. In this instance, as I understand it, levies will be charged on the industry. When the broadcasting authority was established its budget immediately went up to €7.6 million from €6.1 million last year. That does not even allow for the additional €1.5 million that was added on in the last three months of 2009. However, the big difference is that the industry must pay these levies, not the State. Perhaps the Minister of State might clarify this matter because there is reference in the Bill to levies concerning the CER but, as I understand it, the State will no longer pay for the regulatory role. It will be the industry.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

Yes, that is the case.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
Link to this: Individually | In context

That is all very fine as long as the controls are in place to ensure that it is not seen as an unlimited cash cow to which we can return and build up a little empire, making sure that whatever the authority may be it will live up to its brief. I do not have a problem with the CER taking on this role but I urge caution about what can happen so easily.

In this regard one might look at the complaints I received and the paucity of applications for licences. One of the complaints we received concerned the cost to people in the industry, small players, who are taking a very high financial risk by getting involved in exploration in the first place. They see an opportunity and hope it will work out and if it does they will sell out to a big company. I am not worried about the impact on big oil or gas companies. That is not an issue. However, we seem to have a problem when it comes to the small innovative company that may be willing to take a significant risk. Already it is feeding back the view that the licensing regime is inimical to that kind of approach by comparison with the British licensing or regulatory regime.

I do not know how much this is the industry having a bit of a moan or how much of it is a block to our exploiting our natural resources but it is telling that only two licences were applied for in the last round. That needs to be analysed. One can blame many causes - technical problems, recession, whatever, but that is the reality. When we go again we need to be armed with an understanding of the impact that cost, whether of licensing or regulation, has in terms of limiting innovation. The Minister of State, Deputy Conor Lenihan, is especially interested in innovation. We share that interest.

We have an issue with regard to transparency. Again, this is something that always must be balanced against commercial considerations. We understand that but I ask that in so far as we can we make regulation as transparent as possible. I am loath to raise this issue on the day that is in it, with what has just happened with the former Minister of State, but we did not have a very happy experience with the appointment of the new commissioner of energy regulation. Normally, one would expect a proper appointment system and interview process whereby people would come forward to present themselves for a job of this nature. It is a very highly paid job but that is not the point. I do not criticise in any way the person who got the position because he is eminently qualified. However, I do not know if he was the best person and that is my worry. There are Irish people living abroad working in energy regulation who might have wished to apply for the job. They might have brought back the kind of expertise that we do not have in this country because of its small scale. It was a pity it was not a more expansive and transparent process. The Minister, Deputy Ryan, is always talking about transparency. I do not think this was a happy experience and I hope that lessons can be learned from it. I do not believe it was a happy experience and I hope lessons can be learned from that too.

When one considers the original source of the legislation in terms of it being identified by the technical group that examined the whole issue of the laying of the pipeline, we need to remember that another report was prepared by the mediator, Mr. Peter Cassells, who raised issues other than safety which should be acknowledged. I visited Mayo to look at various issues, including the terminal. The impression I got from talking to local people was that much of the damage in terms of the breakdown in trust occurred before Shell got involved. There was a legacy of bad faith and it must be acknowledged that much of this is about people feeling powerless and helpless in regard to decisions being made in which they felt they had no involvement and by which they felt extremely threatened. Obviously, safety concerns are central to that.

The other issues which Mr. Cassells noted in his report as genuine concerns of local people included safety concerns, the terminal, the location, water pollution and discharges, lack of concrete benefits for the local community, financial compensation for some landowners, gas distribution, given that some towns did not benefit, monitoring of the project in the sense of who was to look after the interests of the local community, and relations with Shell. While the tax regime did not come into that, it was certainly an issue that arose in the wider community. I appreciate that many of these concerns have been taken on board.

It was amazing that the towns in Mayo that could benefit from this new development were not part of the strategic plan by the Government. This should not have been an issue. We should have seen this in terms of ensuring that, strategically, every town along that line would benefit. Thankfully, that will now happen but it showed up a failure in strategic planning and it was hard to understand how it could happen.

Of course, it is not over yet. We still have the issue of An Bord Pleanála querying the pipeline itself. In a way, although I can understand it must be extremely frustrating for the developer, this shows that the system is working in a monitoring role and that the planning appeals board is carrying out its functions. I would hope this inspires a certain amount of confidence and that this measure will add to and build that confidence because, if we are lucky, we will have to go through this again - if we are very unlucky, we will not. Either way, however, it would be a great benefit to Ireland to see that kind of find into the future, whether gas or oil.

For all the great plans we have to replace fossil fuels with renewables, the cost of energy imports, which is currently €6 billion, will grow. The International Energy Agency concluded that the growth in energy demand worldwide, for oil in particular, is unsustainable. Our imports of fossil fuels at over 90% are in a particularly vulnerable position. It is not as if we will have a major change in terms of growth in demand. Growth in demand will continue and we have to allow for and manage that. Moreover, we have to recognise that the whole issue of energy security must be central to Government policy in terms of economic planning for the future.

In other countries, when the original oil crisis took place, it drove a change towards renewables which is now set as a model for all of us. If we take the Scandinavian countries, Germany and France, the oil crisis caused such a reaction within Governments that they were able to plan out a totally new direction in terms of future fuel needs. It still took them about 30 years to do that, so we must do the same. We must recognise that we will have significant fuel needs. While we will have to do things differently, one of the factors we have to keep cognisance of is the reality that we are on the edge of Europe, at the end of the gas pipeline in terms of provision from central Europe and in a very vulnerable position.

While I am on the subject, I previously raised an issue to which I felt I did not get an answer, namely, the question of oil stocks in Ireland. While it is slightly off the point, perhaps the Minister of State could take the opportunity to reply to my query. This goes back to last year, when there were questions about Ireland's obligation under the EU directive on emergency oil stocks. We are obliged to maintain 90 days of strategic oil stocks, and we do this through NORA, the National Oil Reserves Agency. However, issues were raised by the European Commission because our stocks were being used as collateral, which means they were not immediately available, and this was in breach of Community law. What is the situation in this regard? While we may have oil stocks, and 90 days does not sound like much, it was the issue that this oil was being used as collateral which the Commission was most unhappy about. The Minister of State might clarify whether this issue has been resolved because it has implications not just for our relationship with the EU but also domestic implications if those stocks were, for any reason, unavailable.

The Sustainable Energy Ireland report, Energy Forecasts for Ireland to 2020, projects that in its baseline scenario the total primary energy requirement will grow by 2020. It states that oil will remain the dominant fuel, accounting for 58% of energy supply by 2020, while dependence on gas is also expected to grow. The International Energy Association's World Energy Outlook set out a context which is certainly challenging in terms of energy security and cost. So far, we have not seen the response in terms of public consciousness. People can see the price going up, for example, because of the carbon tax on petrol, but the actual extent of the issues that have to be addressed has not penetrated public consciousness in the way that is needed. The World Energy Outlook makes the point that we need major decarbonisation of the world's energy system and that the present economic worries do not excuse backtracking or delays in taking action to address these energy challenges.

We have the challenge. I also believe we have the innovative capacity, if it is enabled to be unleashed, to ensure we can make real progress. However, it seems very often that, on the one hand, we have that kind of potential for growth and development and, on the other, we have an out-of-date system of management, whether in terms of the Foreshore Act in regard to offshore wind or the fact there is no geothermal legislation - I wish the Minister well in that regard. The State apparatus is not moving fast enough or in a streamlined fashion to meet the need and to give that chance of real growth in those innovative areas in terms of energy challenges.

This Bill is part of the modernisation of the State apparatus. While I am glad of that, I am conscious that when one talks to people in the renewables area, very often one comes back to the problem that we have a silo mentality within Departments and between Departments, and that legislation is often out of date, clumsy, inoperable and sometimes impenetrable. It is a big task for the Ministers in this Department to ensure that, with regard to energy, at least we are getting things right. I acknowledge that this Bill represents a step forward, but there is still a long way to go. Perhaps it is a case of "a lot done, more to do", although not all that much has been done.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

The Deputy likes that slogan.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
Link to this: Individually | In context

I hope progress in this area will be exponential.

When this legislation is in place I hope the Minister, when he is representing the State at the European Union or in a broader international forum, will be in a stronger position to argue for safety standards globally in regard to oil and gas exploration. We are well aware that there are countries with no proper regulation where people's lives are at risk as a consequence of untrammeled greed. The safety measures that are required, particularly in the developing world, are simply not in place.

Recent media reports indicated that the Ugandan Government has given permission to Tullow Oil to flare gas in that country. Flaring gas has the potential to release huge volumes of greenhouse gases into the atmosphere. The flaring of gas in Nigeria is regarded as the greatest source of CO2 emissions in sub-Saharan Africa. That has an impact in the developed world but, when one considers the impact of climate change, it is the poor areas that suffer most. Now we discover that a company with Irish links is part of the problem in a naked way. I hope we will now be able to argue that case with more authority. When one considers the global agreements that are in place for opening up markets internationally, the other side of the story is that these companies must be controlled and regulated in a way that ensures that whether one lives in Ireland, Uganda or elsewhere, one's health is protected.

A non-governmental organisation in Britain called PLATFORM has carried out a worrying assessment of the situation. It points out that where regulatory frameworks are weak, the danger of flaring of gas becomes a major issue and urges that the absence of an oil production regulatory regime not be exploited by big business. The report states:

Urgent changes should be made to the contracts, legislation and regulatory regime covering oil to achieve a measure of environmental protection, minimise economic distortion through revenue flows and capture a more appropriate share of the revenues. Uganda is heading towards oil production in 2010-11 with no oil legislation in place and no revenue management system and is locked into contracts that undermine the country's sovereign control over its natural resource.

The report goes on to criticise the financial arrangements in place in Uganda. These issues are not as stark in this State as they are in the developing world. However, we can, with reference to the tax regime, question whether Ireland, as opposed to the local community in Mayo, is seeing the benefits of the exploration and exploitation of our natural resources. We have a responsibility to address, whenever we have a responsibility to do so, in international fora the shortcomings that exist in the developing world.

It is not long since we were ourselves neglectful in a way that now seems extraordinarily remiss. Some days ago a deputation of miners from Arigna, Ballingarry and Castlecomer attended a meeting of the Joint Committee on Communications, Energy and Natural Resources. These men were perhaps slightly older than the Minister of State, Deputy Conor Lenihan, but not much. They had gone out to work in the 1960s as healthy young boys and now they are broken and sick men as a result of the work they did on behalf of us all. It is not often that a deputation makes as great an impact as these men, many of whom are suffering from lung disease and heart disease, as well as blindness and tinnitus because of the impact of explosions. It is extraordinary that in our generation these men have had to suffer in this way because health and safety precautions were grossly inadequate.

The State has a responsibility to these men but it seems determined to see them die before it lives up to that responsibility. The mining companies were private companies and are no longer in existence. Where else can these men turn but to the State? They have already been poorly treated by the social welfare system. This is a reminder that although we may consider ourselves a highly developed and sophisticated economy with high standards in health and safety, we only have to look into the faces of those miners, or consider the number of men who died during the construction mania, to realise it is very superficial.

This Bill represents an important and welcome step forward in seeking to protect communities and the environment. Some of the issues it confronts were raised in turbulent times. The corrosive Corrib gas dispute has raised genuine issues to which the State has been slow to respond. The Government is now responding and I hope that at the end of the process in which we are engaged we will have robust legislation which protects people into the future even if we were not able to protect them in the past.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
Link to this: Individually | In context

I propose to share time with Deputy Mattie McGrath.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
Link to this: Individually | In context

Deputy McManus was correct that mining operations in the past, which were welcomed unconditionally at the time, left much to be desired. As someone who had a responsibility for the energy section in the Department of Foreign Affairs for three years in the late 1970s, during which time we had the second oil crisis, and who worked closely with colleagues in the then Department of Energy, I have a certain ongoing interest in these matters. Energy policy is of great importance to the State as a whole into the future.

I welcome the Bill as a confidence-building measure. Public safety is and should be integral to energy regulation, recognising the distinction that is made between the health and safety of workers and public safety for both local communities and the community at large. The background to this legislation is the ongoing Corrib gas controversy. Nobody would argue that it is not legitimate to have safety concerns and to have them properly responded to. It is generally accepted that at the beginning of that project, communication with the public left much to be desired.

The facilities being constructed have been moved as far away from dwellings as possible. However, we must be realistic and accept there is no such thing as absolute safety and security. Advanced societies have industrial and energy plants, pipelines and high voltage electricity. For many years, fertiliser trains moved between Marino Point in Cork, through the centre of the country and through the centre of Dublin, down to Arklow. In certain circumstances, such as at the Bantry Bay terminal in 1979, there is a potential for disaster. It is essential, therefore, to learn from experiences at home and abroad, maximise safety to the greatest extent possible and give the maximum in reassurance to the public.

At the same time, modern society is inconceivable without many of the facilities that in a worst case scenario could create a disaster. A very small example of the kind of conflict that exists is the fact that the vast majority of us use mobile phones but many people still complain about telecommunications masts. It is a question of reconciling the difficulties and the risks.

There is no doubt that the authorities of the State and the Government have shown extraordinary patience with a very prolonged protest. It is vital to protect our infrastructure. There has been a very high cost in policing and delays caused by civil disobedience, using semi-guerilla tactics within the framework of civil disobedience.

One of the reasons for planning procedures and laws is to resolve conflicts of this kind and those should be respected. There is much benefit to the local community from extension of the network and also security of supply. Having our own gas would at least give us security of supply.

There has been some debate in the background about the terms of exploration and development and this is ultimately a matter for the Oireachtas to decide. I do not think this can be decided or determined by local protests. There is an assumption that there are potentially vast resources in the ocean. I agree that it is more than likely we have significant oil and gas reserves but there is no evidence that I am aware of that we have anything approaching North Sea levels of oil and gas. A great illusion which has been around since the late 1970s is that this would provide the answer to all our problems but it would not. There is a notion we should take charge of all the exploration and the development but the costs are vast and the risks are high. Also, significant amounts of capital would be required and we have many other pressing needs. In my view, a lot more realism about what can be achieved is required in terms of oil and gas exploration. I agree that such exploration can make a positive contribution to local and national life but there is no El Dorado off the west coast of Ireland.

While there is much talk of renewables which is a policy supported by all, we have to be realistic in the short term as to how much of our energy needs can be supplied by renewables. I recently visited Ardnacrusha following the Shannon floods. When in operation, Ardnacrusha provides approximately 40 MW of electricity for approximately 40% of the year. Wind energy has a contribution to make as do other renewables but gas is one of the staples of energy supply and it is clean and convenient. It also fuels electricity across western Europe. I do not think there are people who wish to revive the nuclear project which was discussed in the late 1970s but there are countries in Europe, notably Germany, which are still moving in the direction of getting out of nuclear power and there are plenty of hazards. I refer to interconnection across the Irish Sea. I remember Jack Lynch's Government being in favour of this project and talking with the British Ministry of Energy in the years 1978 to 1980. One must rub one's eyes to see that 30 years later, it is still only about to be implemented, with the assistance of some EU cohesion funding.

This Bill is a positive measure for which I congratulate my colleague and his senior Minister. It is important that the greatest possible independent expertise is brought to bear and that it is integrated into the licensing and regulation.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

Deputy Mattie McGrath has nine minutes.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Fianna Fail)
Link to this: Individually | In context

I am glad the Acting Chairman is facilitating both colleagues from south Tipperary.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

I am happy to do so and to support partnerships in constituencies.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Fianna Fail)
Link to this: Individually | In context

Indeed, as he does out in Tallaght.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

Familiar territory.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Fianna Fail)
Link to this: Individually | In context

I congratulate the Minister of State and his officials for all their hard work and also the senior Minister. The Bill concerns the safety of citizens, workers and energy sources. This significant Bill proposes best practice for the safety of petroleum exploration and extraction on which the Minister is to be complimented.

Increased safety in this area is essential. The Commission for Energy Regulation is best placed to monitor these safety practices considering it already has responsibility for the regulation and safety of downstream gas supplies. I am pleased that the issue of petroleum safety will now be the full responsibility of one body. For too long in many areas of governance, we have fallen between two stools with regard to many issues. There is often no direct line of responsibility. Private investors and people who want to develop their ideas get frustrated as they go from agency to agency with no proper area to look at. As previous speakers have said, a certain mentality is deeply ingrained in the apparatus of the State. I refer to the mindset of departmental officials who have been in their jobs for a long time. In fairness to them, they do a hard job to the best of their ability. However, they need to think outside the box. They can be insular and inward-looking when new ideas are presented to them. It can be frustrating for enthusiastic people who wish to develop oil fields or renewable energy projects to receive so little encouragement. They do not seem to be incentivised when they try to bring oil or gas from offshore fields, such as the Corrib field, or to develop renewable energy.

I wish to speak about my own constituency in this context. On a weekly basis, I meet people who are involved in renewable energy projects, including farmers who are being encouraged to change their practices. Such people are not given the latitude, encouragement or incentives they need to support their wonderful ideas. As we know, from small ideas and small seeds grow great acorns. That should be instilled into the mindset of the staff of State agencies, which have responsibility to control and an onus to develop. At this time, our economy badly needs new developments in the energy sector. Gas, oil and various kinds of renewable energy are needed to support our economy, especially as we depend so much on imports of oil and other commodities.

The idea of safety cases to be approved by the CER is welcome. I suggest that local communities should have a greater input into developments that will affect their backyards. The lesson of the Corrib case is that local involvement is necessary, even in the case of a small planning application. In recent years, proposals to develop incinerators in County Tipperary led to hugely divisive campaigns. All kinds of innuendoes and allegations were made. In some cases, very little of the suspicion, doubt and concern that was expressed was valid. As more lies are told, mistrust grows and the situation becomes more divisive. I have been through this in my own constituency.

Local communities must have ownership - more than in name - of the projects that are proposed. They must enjoy some of the rewards too. All developments have an intrusive impact on local areas. The environmental impact may include an increase in traffic volumes on local roads and the disturbance of flora and fauna. Local communities must be consulted, engaged with and, above all, listened to. If there are spoils to be gained, apart from the benefit to the country and the greater good of our communities, local people must share in them. Such benefits do not need to be financial - social benefits such as public amenities can also accrue to towns, villages and rural communities. The recent amendments in respect of public access and information are also welcome. Better transparency is always essential. It is paramount when agencies carry out necessary functions on behalf of the Government.

We need this gas. It is badly needed. It is a huge find by Irish and European standards, although perhaps not by international standards. I am disappointed that this process has been so slow. We cannot afford to wait because there is a very small window. We have to try to attract businesses and companies to Ireland. We do not have the expertise or wherewithal to do it ourselves. The climatic conditions off the west coast of Ireland mean there is a very narrow window, between May and September, in which exploratory drilling works can take place. We need to be able to move and to respond. If we can attract people who are interested, we should encourage them. I accept that health and safety must be a priority. We must have regard to all our rights and issues. We need to have a balance. If we want to attract people to Ireland, we have to allow them to develop their business.

The situation that has developed with the Corrib field is totally distasteful. Our State agencies - I single out An Bord Pleanála in this regard - have been responsible in no small way for the frustrations and anxieties that exist in this respect. It is regrettable that such worries have been hijacked by certain political groups with their own motives. Certain groups will probably always see an opportunity to divide and conquer, and to upset people. An Bord Pleanála should admit that it does not have the power, expertise or wherewithal to assess these situations and deal with them. It should have accepted from the outset that it was not able to handle this matter. This is not An Bord Pleanála's area. While it needs to be an independent body, it can be too obsessed with being seen to act in a totally independent manner without any modicum of fairness. I do not like to say that, but I do so without fear or favour. My layman's opinion is that An Bord Pleanála does not have the necessary wherewithal. It is too slow. It takes too long.

Section 1 provides that the commencement date for this legislation will be left to the discretion of the Minister. While I accept the need for such discretion, I suggest that the Minister needs to be proactive. If we are to have any kind of finish line, perhaps there should be a set commencement date in every Bill. There must be a time line with regard to everything, for example with regard to those who want to make investments. The State has been too slow. While we have many laws, maybe we have little justice in many areas. There are too many licences and regulations. I come from County Tipperary, where we had problems in the past with our miners. We have not learned from the mistakes that were made in that case. If we put too many rules and regulations in place without respecting the ones we have, we may be throwing the baby out with the bath water. In many cases, we are lacking common sense, which is a great thing in all these cases.

Photo of Martin FerrisMartin Ferris (Kerry North, Sinn Fein)
Link to this: Individually | In context

This Bill aims to put in place a statutory overview of health and safety on oil and gas exploration projects, including the Corrib pipeline in Mayo. It would be naive to divorce the legislation from its overall context - the broader issues surrounding the bringing on shore of gas from the Corrib field. During this long running controversy, serious questions have been asked about the manner in which the project has been managed by the main company involved, Shell, and by the State. We recall the imprisonment of five men from Rossport in 2005, as a consequence of their courageous opposition to the manner in which the concerns of the local community were ignored and the pipeline forced on the locality. They have been vindicated on the specific issue of the safety of the pipeline in proximity to their homes. Last year, An Bord Pleanála ordered the company to reroute the pipeline away from houses because it posed an unacceptable risk. It is unfortunate that it took so long to come to such a logical conclusion. Those who rightly protested against the route that was originally proposed were treated badly by the company. The State deployed massive resources to try to break the protest and encouraged a malicious propaganda campaign against the local protestors and their supporters in Mayo and throughout the country. We need to know whether, and how soon, Shell will be able to comply with the conditions that have been set out. It will have to ensure the pipeline runs entirely under Sruwaddacon Bay, something it previously claimed would be impractical and too expensive. Thankfully, An Bord Pleanála saw fit to place the interests of the local community in this instance, backed by international best practice on the routing of potentially dangerous pipelines, above the interests of a powerful multinational. Until then, Shell appeared to be able to ensure it got its way on all matters related to the project. It must submit its new plan this month which will become the subject of a publicly-held inquiry.

That does not mean the issue has been resolved. There continues to be opposition to the project on several grounds. Two weeks ago, we saw the imprisonment of local fisherman Pat O'Donnell for seven months for his involvement in protests against the threat which the project presents to his livelihood and that of other local fishermen. I personally know Pat O'Donnell, a lobster fisherman, who fought to protect his livelihood for which he is now paying a huge price. He would not allow himself to compromised by the multinationals.

That the Rossport protestors have been vindicated calls into question the manner in which they were vilified by the political establishment and the media. They were called either Provos, anarchists, communists, Greens - before the Green Party changed its mind on this, along with so many other matters of principle — or some strange Mayo mixture of the above. That campaign continued with the recent TV3 documentary by Paul Williams which raked over many of the old smears. Of course, Mr. Williams's being the guest of Shell at the Ireland-England rugby match in Croke Park in 2007 was merely a happy coincidence. Likewise, the regular attacks on campaigners by people writing for the Independent News and Media newspaper group has nothing to do with the fact the outcome of the Corrib issue will have a direct impact on the fortunes of Providence Resources involved in the Dunquin gas field off Kerry, a company owned by Tony O'Reilly.

The project also continues to be subject to the easy terms under which the licence was granted. As it stands under existing taxation and royalties terms, the State will gain little in revenue once the gas comes on-stream in comparison to the revenue earned in other countries where multinational companies have been licensed to develop offshore energy resources. The reason behind this is down to two key decisions: one made by a former energy Minister, Ray Burke, in 1987 to abolish royalties and the State's 50% share in any natural resources; the other made by Deputy Bertie Ahern when Minister for Finance in 1992 to reduce the tax rate on oil and gas profits from 50% to 25%. Even the latter is illusory, however, as companies can write off costs before having to declare, meaning no tax will be paid for many years after the gas comes ashore.

As for the claim the Corrib project should be allowed to proceed on the current revenue terms given the importance of securing our energy supply in a volatile world market, the licence terms actually allow the company to export it rather than supply the domestic market. Nor is there any mechanism whereby the State can ensure gas supply costs to domestic and commercial users would be controlled.

The potential value of our offshore oil and gas resources is enormous. The Department of Communications, Energy and Natural Resources recently estimated it at €450 billion. This is a huge figure given the current economic climate in which massive cuts in public provision have been made. It should also be considered in the longer term as a potential engine for sustained indigenous economic development and growth.

The key word, however, is "potential", given that most of what lies off our shores has not yet been developed to the stage of it being available to be brought onshore and to supply the type of injection needed. The argument on the part of the companies and the State is that the costs involved and the difficulties of exploration and extraction are so enormous the figures mean little. However, international experience suggests that once deposits have been identified and licences granted, that they will be extracted. It is, therefore, important to decide how best they ought to be exploited and developed. From the State's perspective, it must centre on what share of the dividend accrues to it and to the population through revenue, royalties and its potential direct share in the oil and gas itself.

It will be argued the State is in no position to impose better terms on the exploration companies, particularly in the current economic climate as it relates to energy supply. Again, international experience suggests a radical approach is possible. While the companies may complain, they would be happy to go along with changed terms, given that even a reduced share on their part still ensures huge profits.

Over the past several years countries like Russia, Bolivia and Venezuela have imposed new terms on the multinationals. They have even taken full or part State control of their natural energy resources without provoking the kind of crisis predicted and threatened by the exploration companies. The oil companies have long been content to pay high rates of tax in Norway where one of the Corrib partners, Statoil, is majority owned by the Norwegian State. In fact, Norway stands to benefit more than Ireland from the Corrib gas being brought on-line. It is proof too that proper state involvement in oil and gas does not require full nationalisation but is compatible with private companies being involved on improved terms.

That the oil and gas are natural resources lying off our coast puts them in a different category from companies coming here to become involved in manufacturing. No Government would allow a multinational agribusiness corporation to buy up hundreds of thousands of acres of land to export live cattle but not pay tax on their profits. That would rightly be seen as a reversion to the old landlord system.

The Irish revolution, as set down in the 1916 Proclamation and the Democratic Programme, recognised limits to the right to private property where the resources, sovereignty and welfare of the people could be at stake. It is on that basis the State should approach the question of our oil and gas reserves.

Any moves towards strengthening the safety aspects of exploration works must be welcomed. However, we must look at the broader context that it is not enough to ensure communities and workers are protected from possible harm but that the exploration sector is brought under proper public supervision so that any gas and oil that comes on-stream benefits the people and economy.

Photo of Peter KellyPeter Kelly (Longford-Westmeath, Fianna Fail)
Link to this: Individually | In context

The Petroleum (Exploration and Extraction) Safety Bill 2010 will confer statutory responsibility on the Commission for Energy Regulation, CER, for upstream or unprocessed petroleum safety. As it stands, this responsibility is split between several agencies such as an Bord Gáis, the Health and Safety Authority, An Bord Pleanála and county councils. The need to dispense with the current fragmented regulatory and safety regime in favour of a more unified approach was brought to the fore by the independent mediator in the Corrib dispute, Mr. Peter Cassells. I agree with Mr. Cassells that one cannot have various different bodies doing a regulatory job when a single agency would suffice.

A specialised Corrib technical advisory group, founded by the then Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, in 2005 also found the regulatory regime was incapable of giving due weight to the societal risk posed by petroleum-related activities. There is a need for a State body with the appropriate expertise and powers to regulate overall public safety in the sector. With market liberalisation, the Energy (Miscellaneous Provisions) Act 2006 conferred responsibility on CER for the public safety of downstream or processed gas activity. This Bill will now extend the responsibility of CER to the safety of upstream oil and gas. Ensuring maximum public safety is the fundamental objective of this proposal and this is the overriding benefit. Under this Bill, the HSA will remain responsible for enforcing occupational safety and health laws for oil extraction.

A number of different approaches have been taken by other countries. The UK, for example, has chosen to empower its general employment health and safety authority with specific powers for pipeline safety. This type of system does not lend itself to Ireland as the legislation establishing the HSA here is different from that in the UK. The HSA cannot be given responsibility for infrastructure that does not have operatives in attendance. It is responsible for the safety of employees rather than for the public at large. The HSA does not have experience in this field of pipeline safety. In any case, it would not make sense to have two separate regulatory or safety organisations for one industry, particularly when the upstream aspect is relatively minor. Under this legislation CER will be able to recover its losses from the industry. The new safety regime for upstream safety is designed to strengthen public safety and is in compliance with the recommendations of the recent safety studies into the Corrib gas field. In the future it would be worth exploring the option of giving overall responsibility for pipeline safety to one authority, as is the case in Denmark.

This would be extremely beneficial in terms of benefits of economies of scale and the pooling of professional knowledge. This is a technical Bill but its main objective is very clear. It will ensure the highest standards of public safety are adhered to for upstream petroleum. I commend the Bill to the House.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

To bring the proceedings to a conclusion, I thank the last two speakers, Deputies Peter Kelly and Mattie McGrath, for bringing a strong business perspective to the debate. Often, people from a business background are not represented in the House and that viewpoint is not represented in discussions and deliberations here. I praise Deputy Mattie McGrath for being such a vocal opponent of over-regulation and excessive bureaucracy because it is a major challenge for us as we face out of recession and into recovery. We must disassemble much of the bureaucracy we created in the past 20 to 30 years in aid of and as assistance to our business community to create more exports, jobs and investment in Ireland.

It is important this measure is seen in the context of making it easier for people to explore in Irish waters. We have created barriers to people coming in here to explore Irish waters. As the Minister of State with responsibility for this area, I am most keen that we are in a position to vigorously promote the possibility of potential for exploration in Irish waters, following the passage of this legislation and other measures. As the Minister of State with responsibility for this area, I would not feel comfortable promoting investment in the offshore licensing scene in Ireland precisely because we are perceived, reputationally, internationally and otherwise, as a bad place to invest. This is due mainly to regulatory and bureaucratic controversies and the civil protests that accompanied the Corrib projects. This has done enormous damage to our economy and to the potential to develop the economy, particularly the enormous resources we have off the coastline in exploration opportunities.

Great damage has been done by the Corrib experience. I am not telling any secrets out of school in saying that a number of businesses have indicated that they would not compete for Irish exploration licences because of what they read and heard about the Corrib project. With this item of legislation, it is important that we rationalise the situation with regard to safety requirements for those who wish to explore Irish waters.

I welcome the positive contributions of Deputies Simon Coveney and Liz McManus. It was interesting to hear Deputy McManus refer to the cumbersome bureaucracy that accompanies much of the permissions required in this field. This is a new thing, coming as she does from the left persuasion.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
Link to this: Individually | In context

I do not have the faintest idea what the Minister of State means by that.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

Her contribution was welcome in that regard. We need to break down some of the cumbersome obstacles we have put in place to allow people to explore off Irish waters.

Regarding Deputy Coveney's contribution, I was unaware a safety case was required prior to approval. I am not sure anywhere else in the world publishes a safety case for public consultation prior to assessment and approval. We will not go down that route. The rest of Deputy Coveney's contribution was positive and presented a realistic understanding of the risks and rewards of offshore exploration in Ireland. There has been a naïve debate, reflected in the contribution of Deputy Martin Ferris, that we should make it more onerous for people to explore in Irish waters. This is not particularly attractive, because of the experience of the Corrib but also because of the fact that offshore waters, particularly those off the west coast of Ireland, are particularly difficult in drilling terms. There is a short window between May and September in which one can drill. It is a difficult, high risk deep water operation.

I welcome many of the contributions and know that all of them are predicated on being positive. I welcome the contribution of Deputy McManus in that regard. The contribution of Deputy Ferris was naïve. Some Members compare everything to the Nordic countries. Deputy Ferris seems to think Norway provides all the answers in terms of incentives for offshore exploration. It is always interesting to hear partial quotation of facts. It is true that one can pay up to 70% as well as tax for exploration of Norwegian waters but if one drills unsuccessfully in its waters the state will underwrite the cost to the tune of 70%. It is not simply a universal application that we could import into the Irish situation. I thank the Deputies for their contributions and look forward to the following Stages of the Bill.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
Link to this: Individually | In context

I apologise for being late but I want to ask the Minister of State about the oil stocks.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

That is not in my competence or mandate but I will ensure my officials respond directly to Deputy McManus. I do not have the detailed knowledge she requires in respect of why the EU has ruled a particular way with regard to our oil reserves being held as collateral. I will clarify that by a direct note to the Deputy.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
Link to this: Individually | In context

I wanted to know what we were doing about it.

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
Link to this: Individually | In context

We will send the full answer directly to the Deputy. I welcome the intervention of Deputy McManus.

Question put and agreed to.