Breeda Moynihan-Cronin (Kerry South, Labour)
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Question 88: To ask the Minister for Communications, Marine and Natural Resources the developments on plans for a strategic gas reserve; if the Kinsale reservoir will be utilised in this regard; and if he will make a statement on the matter. [20650/06]

Noel Dempsey (Meath, Fianna Fail)
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Responsibility for monitoring the security of Ireland's natural gas supply lies with the Commission for Energy Regulation (CER). The CER publishes annually a 7-year rolling forecast of capacity, flows and customer demand ('the Gas Capacity Statement'). The forecast also assesses whether projected supplies of gas from indigenous sources, imports and storage, are sufficient to meet forecast demand. A key finding of the 2005 Gas Capacity Statement is that, even under unusually cold weather conditions, the Irish gas transmission system can cope with forecast demand.

The issue of a strategic gas reserve is one of the issues to be addressed by means of an all-island study, which will assess the potential for natural gas storage on the island and the possible contribution of LNG to security of supply on an all-island basis. While Ireland does not currently maintain a strategic gas reserve, commercial reserves of natural gas are held by licensed natural gas shippers and suppliers, including Bord Gáis Éireann (BGÉ). Indeed, at current levels, BGÉ's Kinsale reserves can supply 50% of non-daily metered customer requirements, i.e. small business and domestic for up to 50 days. This is in addition to stocks held by BGÉ in the UK, which operates a similar regime to Ireland.

Also, BGÉ, as the natural gas Transmission System Operator, has developed contingency plans in the event of any curtailment in gas supplies. These plans include switching gas-fired power generation plant to alternative fuels, voluntary reductions from large industrial gas consumers and using its reserves from the South-West Kinsale reservoir.

The CER is in the process of issuing a licence to Marathon Oil Limited to operate a storage facility at the depleting gas fields off the Kinsale Head in Co. Cork. This facility, the first such in the country, with considerable storage capacity, will come into operation in the coming weeks. It will be an important enhancement of security of supply.

Work is well advanced in finalising transposition of EU Directive 2004/67 on measures to Safeguard Security of Natural Gas Supply. This will serve to further define the roles and responsibilities of gas market players relative to security of supply in the context of the liberalised natural gas market.

Another welcome development is the announcement on 22 May last that Shannon Development has entered into an 'option-to-purchase' agreement with Shannon LNG. This Irish subsidiary of Fortune 500 Company Hess LNG Limited is developing a project to build a €400 million liquefied natural gas (LNG) receiving terminal near Tarbert on the Shannon Estuary. The project could potentially provide up to 40% of Ireland's gas requirements and I am certainly interested in exploring the scope for realising that potential with all concerned, bearing in mind that this is a commercial venture. The estimated date for completion of the project is 2011.