Leo Varadkar (Dublin West, Fine Gael)
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Question 486: To ask the Minister for Communications, Energy and Natural Resources the number of days of gas storage required under EU and IEA rules; the current number of days of gas storage here; and if he will make a statement on the matter. [35848/10]

Eamon Ryan (Dublin South, Green Party)
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There is no legal obligation under either EU or International Energy Agency (IEA) rules for Ireland to hold strategic reserves of natural gas, i.e. reserves that could not be accessed under normal market conditions. There is such a requirement in the case of oil.

Analysis by the European Commission, undertaken as part of the Second EU Strategic Energy Review, shows that the cost of strategic gas storage is very high, at five times that of oil storage. The potential for gas storage facilities is also dependent on geological conditions. For example, depleted gas fields (such as is the case with the storage facility at Kinsale) or salt caverns are often good options for storage. This also means that some countries do not have suitable geographical conditions for potentially storing gas. For these reasons the European Commission has indicated it will not impose EU obligations regarding strategic gas stocks.

The key objective of the proposed EU Regulation on Security of Gas Supply is to ensure that the market meets the gas supply needs of Member States through commercial gas storage. The Commission is of the view that strategic storage can by definition only be a national measure and is not seen as adding to the security of gas supply on an EU level.

The existing commercial gas storage facility at Kinsale has the capacity to hold 198 million cubic metres of natural gas. Licensed by the Commission for Energy Regulation (CER), the facility could potentially supply around 50% of residential and SME gas needs for up to 50 days in the event of a gas disruption. I welcome the current market interest in developing further commercial gas storage, both in Ireland and in Northern Ireland. Should these investment decisions come to fruition the amount of gas available could exceed demand on the island of Ireland.

Responsibility for monitoring the security of Ireland's natural gas supply lies with the CER. Under the EU Directive 2004/67 the CER is required to prepare an annual Gas Capacity Statement, which provides a 10-year rolling forecast of capacity, flows and customer demand on Ireland's natural gas system. The most recent Capacity Statement, which was carried out on an All Island basis by the two Regulators and published last July, concluded that projected supplies of gas from indigenous sources, imports and storage, are sufficient to meet forecast demand in the medium term.

The short- to medium-term prognosis for the security of Ireland's gas supplies is relatively secure in light of the projected relative stability of the UK gas market. Increased global gas supplies combined with reduced global demand has led to the IEA projecting a more benign world outlook for the next few years. 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.

There is currently interest in providing LNG 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 a 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.

All these factors underline 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.