Written answers

Tuesday, 10 February 2009

Department of Communications, Energy and Natural Resources

Energy Resources

9:00 pm

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Question 120: To ask the Minister for Communications, Energy and Natural Resources his views on whether there is a need for stocks of gas supplies to be mandatory, similar to the reserves for oil through NORA; the position in relation to gas supplies here; and if he will make a statement on the matter. [4559/09]

Photo of Eamon RyanEamon Ryan (Dublin South, Green Party)
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There is currently no requirement under EU legislation for Ireland to hold strategic reserves of natural gas i.e. reserves that could not be accessed under normal market conditions, as is the case with oil under IEA obligations. Recent European Commission analysis, undertaken as part of the Second EU Strategic Energy Review, shows that the cost of strategic gas storage is very high, at 5 times that of oil storage. The potential for gas storage facilities is also dependent on geological conditions. Therefore depleted gas fields (such as is the case with the storage facility at Kinsale) are often good options for storage. This also means that some countries do not have the potential to store gas. For these reasons the European Commission has indicated it will not impose EU obligations regarding strategic gas stocks.

The existing commercial gas storage facility at Kinsale has the capacity to hold 198 million cubic metres, licensed for use by Bord Gáis Éireann, which could supply around 50% of residential and SME gas needs for up to 50 days in the event of a disruption to our gas imports.

While the prognosis for the security of our gas supplies is relatively secure in light of the stability of the UK gas market, it is nevertheless prudent, in light of our dependence on gas imported from the UK, to seek to reduce our reliance on this source. In this regard, the question of gas storage, including Liquefied Natural Gas (LNG), is being considered on an All Island basis. My Department is working with the Department of Enterprise, Trade and Investment in Northern Ireland, and energy Regulators North and South, to examine the medium to long term position with regard to security of gas supply on the Island of Ireland.

In addition, there is interest in providing further gas storage on a commercial basis. Shannon LNG — a wholly owned subsidiary of the US firm Hess LNG — proposes to construct an LNG re-gasification terminal at a site located on the Shannon Estuary between Tarbert and Ballylongford in County Kerry. The project, which could potentially provide up to 40% of Ireland's gas requirements, is being planned on a "merchant" basis. This means that the project is private sector development which would be run on a commercial basis. LNG has the potential to improve connectivity to the global gas market, which would be a critical factor in the event of a major supply disruption.

However, any discussion of this issue clearly underlines the strategic importance of diversifying our sources of gas supply — not least indigenous production — including the importance of bringing the Corrib Gas field into production. At full production this field is estimated to meet 60% of our annual demand for gas for circa five years.

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