Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 343: To ask the Minister for Communications, Energy and Natural Resources his views on the Western Development Commission paper, Why Invest in Gas, which outlines the clear benefit of extending the natural gas distribution network to the north west; and if he will make a statement on the matter. [31440/11]

Pat Rabbitte (Dublin South West, Labour)
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The Commission for Energy Regulation (CER), which is a statutory, independent body, has, since 2002, been charged with all aspects of the assessment and licensing of prospective operators who wish to develop and/or operate a gas distribution system within the State under the Gas (Interim) (Regulation) Act 2002. I have no direct statutory function in relation to the connection of towns to the gas network.

The development and expansion of the natural gas network is in the first instance a commercial matter for Gaslink, which is mandated under Section 8 of the Gas Act 1976, as amended, to develop and maintain a system for the supply of natural gas that is both economical and efficient. The CER, in 2006, approved a new network connections policy, which created the opportunity to reassess the feasibility of connecting certain towns to the gas network. In order for any town to be connected to the gas network, certain economic criteria need to be satisfied as a prerequisite. The policy allows for the appraisal of a town either on its own or as part of a regional group of towns.

This policy ensures that, over a certain period, the costs of connecting the town, or group of towns, to the network are recouped through the actual economic consumption of gas and the associated tariffs. Otherwise, uneconomic projects will increase costs for all energy consumers.

Having regard to the CER policy on new towns connections, Bord Gáis Networks, and more recently Gaslink, have carried out a comprehensive review of towns not connected to the national gas network. In April 2010, Gaslink published its 'New Towns Analysis Phase 3' report. The study is a comprehensive assessment of 39 towns not already connected to the national gas network. It was approved for publication by the CER following detailed economic analysis based on the criteria outlined in the CER's policy. The report reviewed the feasibility of connecting 11 towns in the West and North West region which are again the focus of the Western Development Commission paper, 'Why Invest in Gas'. However, the Gaslink report found that none of the towns qualified for connection on economic grounds. Consequently, there would appear to be no case for connecting these towns to the network.

The analysis by Gaslink supports the results of a feasibility study, commissioned by my Department in July 2004. That study concluded that the extension of the Galway Mayo pipeline to Sligo and Donegal would require 100% subvention of the capital costs and would also require an annual subvention to offset the operational costs of the pipeline. Based on this cost benefit analysis, there would appear be no case for the investment of State funds to extend the gas network to the towns examined. In the meantime, Gaslink will continue to review towns which did not qualify for connection under the Study and other towns on an ongoing basis. The key factor which would qualify a town or group of towns in any future review would be a significant increase in demand for natural gas, probably resulting from the addition of a new large industrial or commercial facility.

Brendan Griffin (Kerry South, Fine Gael)
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Question 344: To ask the Minister for Communications, Energy and Natural Resources further to Parliamentary Question No. 329 of 18 October 2011, the actions he will take to ensure the future of an economically crucial project (details supplied) in County Kerry; if his attention has been drawn to the jobs potential for County Kerry associated with this project; and if he will make a statement on the matter. [31465/11]

Pat Rabbitte (Dublin South West, Labour)
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Since 2002, the regulation of the gas market has been the responsibility of the Commission for Energy Regulation (CER), which is statutorily independent in the performance of its functions. I have no direct statutory function in relation to liquefied natural gas (or LNG) projects, including specific projects like the Shannon LNG project.

I understand that Shannon LNG – a wholly owned subsidiary of the US firm Hess LNG – received full planning permission in 2008 for its proposed "merchant" development of a liquefied natural gas (LNG) re-gasification facility near Ballylongford in County Kerry.

I also understand that Shannon LNG, among others in the gas industry, currently has an interest in the outcome of a deliberative process being undertaken by the CER in regard to the regulatory treatment of the gas interconnectors with Great Britain. This issue, currently under consideration, is an extremely complex regulatory question given not least the implications for gas and electricity business and domestic consumers. The CER's ongoing deliberative process in this regard is at an extremely advanced stage with a decision expected to be made in the next month or so.

I strongly welcome Shannon LNG's proposal to construct a merchant LNG re-gasification terminal, as did my predecessor on several occasions. Within the EU, Member States differ significantly in their reliance on LNG with some states having zero imports while others such as Spain import LNG for the bulk of their gas requirements.

The project, should it proceed, would be the first LNG terminal on the island of Ireland. With 96% of Ireland's gas demand currently being supplied through the interconnectors, the proposed facility would provide additional security of supply, in that it would bring diversity to Ireland's supply sources and bring direct connectivity for the first time between Ireland and the global LNG market. The prospect of such a facility is therefore a potentially positive step for the island of Ireland in energy security terms. The employment aspects would also be beneficial were the project to go ahead.

While neither I nor my Department have any direct role in regard to the project, pro-active support for the project can be demonstrated by the ongoing engagement by Ministers and Departmental officials with the company. The CEO of Shannon LNG has been in regular contact with the Department and the CER in regard to the project since its announcement in 2006. Since assuming office, I have met with senior management in Shannon LNG and Hess LNG and also with a local delegation in regard to the project.