Tony Mulcahy (Fine Gael)

I welcome the Minister back to the House. It is important that we are addressing the work that has been carried out by the Oireachtas Joint Committee on Communications, Natural Resources and Agriculture as access to oil and gas could be welcome components of a successful economic recovery. The committee has produced an informative report stretching to more than 200 pages arising from various hearings the committee held between September 2011 and March 2012. I hope the Minister and his departmental officials will take much of what it contains on board and that he will work on the findings.

While the Department has responsibility for the exploration of oil and gas, it must be borne in mind that an independent body, the Commission for Energy Regulation, CER, has responsibility for the regulation of the activities of the oil and gas industry with respect to safety. The separation of responsibility was identified as a necessity during the Corrib dispute by Peter Cassells who said that it was an unsatisfactory position that the Department was charged with promoting gas and oil exploration and the monitoring of the construction and inspection of the pipelines. This shows that there have been problems in the past but that we are learning from them for the better. The report adds to the bank of information.

This country imports more than €6 billion worth of fuel every year, some from parts of the world that are currently experiencing much upheaval thus resulting in higher fuel costs. I have spoken many times previously about the problem and how we should examine renewable, indigenous sources of energy. We must also look for potential sources of hydrocarbon fuels in this country both onshore and offshore to reduce our dependence on imported oil and gas.

This country has not been a successful destination by international standards for offshore exploration companies with only four commercial discoveries since the 1970s, namely, Kinsale, Ballycotton, Seven Heads and the Corrib gas field. In terms of the number of exploration companies operating, the report indicates that this country is just about managing to avoid a net loss and that there was only one new entrant in 2011. According to the committee's report we have had 182 wells drilled but only 24 have been for development and production. In its appearance before the committee in September 2011, the Department recognised the poor number of wells drilled when it said that we are typically doing one mile per year which is extremely low. It said that we needs tens if not hundreds more wells to make an impact. The way to change those figures is to create the conditions, be it through our taxation policy and-or how we award licences to exploration companies. The more wells drilled, the better the odds of finding more commercial fields. That will be achieved by issuing more licences, which will follow from attracting more licence applications, which will happen when the conditions in this country are attractive for the location of the industry.

We should look at the number of applications under the 2011 round of licensing when 15 applications were received. In comparison, in the recent round of applications in the United Kingdom 350 applications were received. The comparison might be similar to comparing apples and oranges as the United Kingdom has proven vast commercial finds since the 1970s but it is an indication that we must work harder to get the applications. No one is suggesting that we sell off the options for buttons but we must look at the models we use while protecting the resources for the State and the taxpayer.

The report makes 11 recommendations. They were developed to encourage the exploration of the natural resources for the benefit of the nation. We must do everything in our power to encourage both domestic and overseas exploration companies to identify this country as a location in which to set up operations. Some of the recommendations include a review of the Petroleum and Other Minerals Act 1960 to enable a clear and transparent fiscal and licensing regime; that the State should keep those regimes under constant review; the obtaining of geological data from all licensees is of paramount importance; that the State should consider ways of controlling production volumes as part of its resource management; and there should be a clear and comprehensive public consultation process at the first substantive stage, thus avoiding situations such as the Shell to Sea campaign.

It is recommended that the tax take should be a minimum of 40% but I agree with Senator Mac Sharry that I would be flexible on it if it meant getting more business. We must examine that issue. An important recommendation is that the Minister would draw up a strategic policy document for petroleum exploration in addition to maintaining the ongoing contact with other countries such as Norway and Portugal with a view to the exchange of ideas and to learn from their experiences. A recommendation that makes much sense is the prohibition of gas flaring. How many times has one seen on television shots of oil platforms burning off considerable amounts of valuable gas? One could run a lot of barbecues with all the wasted gas.

The offshore island gas industry has contributed to the development of the economy through discoveries such as the Kinsale gas field which was discovered by the exploration ship Glomar North Sea in 1971. The find resulted from the search for oil which started in the 1960s in the Celtic Sea. No oil was found then but the international exploration company, Marathon, discovered gas in waters only 100 m deep and a further 1000 m below the sea bed. The field was developed in 1976 and the first gas was brought ashore. Currently, it supplies approximately 15% of this country's natural gas needs and when new fields such as the Corrib gas field come on-stream we will further reduce our need for imported fuels.

With advances in technology, fields once considered non-commercial can now be harnessed. The Barryroe field, which was discovered in 1973 by Esso in shallow waters off the Cork coast was classified as non-commercial. I believe it should now be included in the commercial finds column as data released by Providence Resources since the report was published in May forecasts 12,500 barrels of oil per day and 11 million cu. ft. of gas per day. The economic threshold for market viability of a field is 1,800 barrels per day. This model allows for horizontal wells, which while more expensive than conventional wells are much more productive and have less well heads, thus ensuring that significant savings can be made on extraction. It is believed that a potential saving up of to €650 million could be made on that find alone and the money could be invested in further exploration and development.

In addition to the Barryroe holding, Providence Resources has holdings at Spanish Point and the Burren. In the 1940s we were told that this country had little if any natural resources. We had low grade coal, lead, silver and a lot of turf which has become an issue in the recent past. The notion that oil or gas could exist onshore or offshore was laughed at, yet many things have changed in the past 70 years. I commend the report to the House. I especially thank the members of the Oireachtas joint committee, the oil and gas industry for the figures, SIPTU, community groups, the Norwegian Government and officials from the Department of Communications, Energy and Natural Resources for their work in preparing the comprehensive report.