1 Executive summary

Generations of Irish schoolchildren have TRANSFER OF OWNERSHIP AND CONTROL learned that lacks valuable natural Unfortunately, the terms under which Introduction resources. However, Ireland’s offshore ter- companies are granted permission to ex- ritory of 652,000 square km is nine times plore for these hydrocarbons are so heavily Ireland is at a crucial juncture in its approach larger than Ireland itself. Recent govern- weighted in favour of oil companies that the to energy supply. As global supplies of oil and ment and industry data – as well as discov- benefit to Ireland is almost non-existent. gas dwindle, more attention has focussed CONTENTS eries by oil companies – indicate the poten- The terms were introduced 20 years ago, on the prospects for these resources in Ire- tial for vast reserves of oil and gas under following heavy lobbying of the Haughey land’s offshore. The economic crisis has also Executive summary 3 this seabed. government by the oil industry. Under these prompted people to ask whether mineral re- According to a 2006 study for the gov- terms, when a company finds oil or gas in sources could offer a new source of wealth. How much oil and gas is under Irish ernment, the Atlantic Margin alone, off the Irish territory: Debate about Ireland’s oil and gas resourc- territory? 5 west coast, contains “potential reserves of • Ownership and control of that oil or gas es has progressed somewhat, due to pressure For how long can a company sit 10 billion barrels of oil equivalent (oil or is transferred in full to the company; from campaigners. There is a growing aware- on a licensed area? 8 gas).” At June 2012 prices, this is worth • No royalties are paid to the State; ness that Ireland’s licensing terms are highly €750 billion euro. This estimate does not • The company can choose to export the unusual, putting Ireland at the bottom of the How do Ireland’s terms compare to include the areas off Ireland’s south and oil or gas; international league table in terms of the other countries? 10 east coasts, where several valuable discov- • They do not have to land the resources State’s share of the revenue from the sale of eries have been made, nor does it include in Ireland or use Irish services or oil and gas – resources that belong, according What % of the value of Irish oil Ireland’s onshore. personnel; to the Constitution, to the State. or gas will return to the State? 12 For the purposes of this booklet, a de- • Even if the companies decide to sell in The oil industry and Irish Government no What is PRRT? 17 tailed map and tables have been painstak- Ireland, the full current international longer try to pretend that Ireland is resource- ingly compiled. These provide, for the first price will be recovered from the poor. They now concede that Ireland is very Options for Ireland 17 time, a detailed overview of all the pros- consumer; likely to have large reserves of oil and gas, but Table: Ireland’s most significant pects and discoveries in Irish territory, • Ireland has no ability to limit extraction now argue that the only way to get at it is to complete with the companies’ own esti- in light of the link between fossil fuels prospects & discoveries 20 transfer full ownership and control of those mates for how much oil or gas they con- and climate change. resources to private companies. Table: Other areas in Irish tain. The combined total of these company The only guaranteed benefit to Ireland Media coverage of, and political debate territory 21 estimates is almost 20 billion barrels of from extraction of these resources is a 25% around, this issue continues to be hampered oil equivalent. These tables and map are corporation tax on the profits declared from by a lack of information and by misinforma- Map: Oil & gas exploration & complemented by an extensive online re- the sale of the oil or gas. Before declaring tion. Politicians, economists and journalists discoveries Ireland 2012 22-23 source, including sources. profits, the company can write off 100% of have tended either to ignore the issue or to Security of supply 25 Even if a small amount of this is present costs against this tax, including the cost of represent it through a distorted prism created and recoverable, it will be an enormous stra- previous, unsuccessful wells drilled any- by the oil industry lobby. Ireland’s oil and gas and tegic asset for Ireland. However, due to an where in Irish waters and costs incurred Against this background, this information climate change 27 uninformed public debate and interference in other countries. (Following changes in booklet aims to provide an alternative source by the powerful oil lobby, we risk handing 2007, in exceptional cases a very large field How we got here 30 of reliable, referenced information for cam- over control and ownership of this asset to could incur an additional tax of between paigners, academics, trade unionists, politi- Fracking in Ireland 31 private oil companies, whose interests are 5% and 15% on post-tax profits. However, cians, journalists and anyone with an interest very different from those of the Irish public. this does not apply to the many licences in gaining a critical understanding of this sec- Corrib: a decade of resistance 33 The Irish government has been actively granted before 2007.) tor. This booklet does not seek to prescribe Human rights & Corrib policing 35 encouraging exploration in Irish waters. International studies show that State any one course of action, but does set out One of its aims is to turn Ireland from a ‘take’ in Ireland is among the lowest, several options for improving the situation. Opinion polls & the Corrib project 36 “net importer” into a “net exporter” of oil roughly half the rate of countries with a – , July 2012 and gas. similar economic approach. An industry re-

2 3 port suggests the exchequer would earn as gas. As the map and tables in the centre little as 7% of the revenue generated from of this booklet show, companies are accu- the sale of the gas from an Irish field. In mulating scores of prospects, waiting for other words, Ireland effectively pays 25% international commodity prices to increase of the exploration and development costs, and the technology to extract to improve. but gains considerably less than 25% of the profits, despite owning the resource in FOSSIL FUELS AND CLIMATE CHANGE the first place. Improving Ireland’s licensing terms is not simply a case of substituting the Irish peo- WHY HAVE SUCCESSIVE GOVERNMENTS ple for private corporations as the benefi- MAINTAINED THESE TERMS? ciary of the extraction and burning of fossil The government and oil industry argue that fuels. However, under our current terms, the it is necessary to maintain these “attractive” decision about whether and at what rate to terms, because exploration in Irish waters extract such fossil fuels – in light of global is difficult, with a low success rate and be- climate change – is solely in the hands of cause Ireland needs to secure a domestic these private companies, whose only mo- supply of gas and oil. They also point to the tive is profit. importance of encouraging “inward invest- ment”. However, improved technology and WHERE TO FROM HERE? huge rises in the price of oil and gas mean Across the world, national governments it is now much easier and more lucrative to are redrafting their licensing terms for locate and extract these resources than it oil and gas exploration. In some cases, was when the terms were drawn up a quar- they are revoking or renegotiating exist- ter of a century ago. ing contracts with oil companies on the basis that these deals represented a cor- SECURITY OF SUPPLY rupt transfer of sovereign assets to pri- Ireland’s terms do not provide security of vate companies. supply, because they do not stipulate that Ireland is out of step with these global Ireland’s offshore territory is nine times larger than Ireland itself Irish oil or gas must be supplied to the Irish developments. However, it is not too late to (See map on centre pages, showing all discoveries and prospects in Irish waters) market, or even brought ashore here. Oil take action. In the se ction starting on page can be shipped abroad directly from the 10, we outline a variety of options that are rig, meaning no jobs, investment or supply available, based on the systems in place in in Ireland; gas found in the Irish Sea can other countries. How much oil and gas is under Irish be piped directly to the UK. Also, even if gas is supplied to Ireland, this will not help COLLATERAL DAMAGE territory? us in the event of an international crisis: The harmful consequences of Ireland’s as world prices increase, the price we pay pro-corporate approach to oil and gas are The story of Ireland’s oil and gas begins more nine times greater than its land area. This ter- for oil or gas from Irish fields will increase not purely financial: there are also severe than 200 million years ago. Oil and gas formed ritory contains several sedimentary basins that accordingly. social consequences associated with the from oceanic sediment containing the remains are geologically significant for hydrocarbon ex- mismanaged extraction of our resources. of microscopic algae or plankton, which drifted ploration. CAN WE NOT WAIT UNTIL MORE IS The final section of this booklet docu- down to the sea bed after their death. Over un- In the Jurassic and Cretaceous Periods FOUND AND THEN CHANGE OUR TERMS? ments how the State’s facilitation of the imaginable aeons of time, these layers became (roughly 200 to 65 million years ago), when There is an argument that Ireland’s terms has wreaked devasta- many miles thick in places and were eventu- much of the oil-bearing rock of the North At- can be changed later, once Ireland’s poten- tion on people’s lives in north Co. Mayo ally compacted to sedimentary rock. Areas of lantic was formed, the North American and tial has been “proven”. Unfortunately, the and also how the huge power of the oil in- sea bed which were subject to subsidence and Eurasian continents lay close together. Ire- Government is rapidly awarding licences dustry combined with the State has been consequent infilling by sedimentation over this land’s basins were formed alongside geologi- for the remaining blocks that are likely to given pause by the non-violent resistance period are referred to as sedimentary basins. cally similar basins (see map on next page) contain commercial quantities of oil and of a few small communities. Ireland has a relatively large offshore territory, which are now in Norwegian, UK and Canadi-

4 5 an waters1, and which contain proven giant oil hospitable and unrewarding, is increasingly and gas fields. These include the Faroe-Shet- coming within reach, and contains numerous land, an established major hydrocarbon-pro- oil and gas prospects. ducing area in the North Sea, the Møre Basin, The map in the centre of this booklet (pag- which contains the giant Ormen Lange gas es 22-23) shows 69 exploration areas. Their field, and the Newfoundland and Labrador numbers on the map can be cross-referenced waters, which produce about 270,000 bar- against the tables on pages 20-21, which give rels of crude oil per day, representing 10% of further details, including estimates published Canada’s total crude oil production2. by the relevant exploration companies for This proximity is particularly pronounced how much oil and gas they may hold. Areas with the vast and under-explored Hatton 1-21 include the most notable discoveries and Rockall Basins, in the outer reaches of alongside some other areas currently attract- Ireland’s offshore waters. Natural oil seeps ing attention. It is likely that some of the oth- and gas chimneys, indicators of oil and gas er 48 areas will also yield significant quanti- deposits, have been observed in these areas, ties of oil and/or gas in the future. Many have which are also in the oil industry’s sights for been identified only very recently. the longer-term future. 3,4,5 The estimates of the potential quantities However, as yet it is in the closer and more in each prospect are figures that have been accessible waters such as the Slyne, , published by the companies who hold the li- Porcupine and Celtic Sea Basins that most cences. The total would come to an immense current exploration activity is focused. 20,964 million (i.e. approx. 21 billion) bar- rels of oil equivalent (mmboe). If even a IRELAND’S RESERVES BECOMING EASIER small fraction of this were in place and com- AND CHEAPER TO FIND AND EXTRACT mercially recoverable, it would be worth a co- For more than a century now, the global oil and lossal sum of money. gas industry has been in a process of moving These tables and map are accompanied from ‘easier’ and cheaper hydrocarbon to the by an online spreadsheet, with detailed infor- more challenging prospects, at first on land, mation about sources: www.shelltosea.com/ next in the shallow waters of bays and lakes, booklet. This will be updated on an ongoing and then in the deeper seas, driven by rising basis and is intended as a resource for re- oil prices and technological advances. The searchers, campaigners and journalists. Irish offshore, traditionally regarded as in- However, it must be borne in mind that the oil industry speaks with two contradic- tory voices (see box on page 14). One is the message often heard through the mainstream Ireland imports its natural news media: that there is very little oil or gas Myth gas from Russia, which to be found, and the State should reduce its means we are vulnerable to political terms still further since the oil companies instability in Russia and eastern Europe. take all the risk of exploration.6 Simultane- ously, often in the financial pages of the same Reconstruction of the North Atlantic region at approximately 100 Ma (100 million years ago, According to Bord Gais, newspapers and in the industry press, the oil mid-Cretaceous) showing the palaeo-location of the Hatton and Rockall Basins. Reconstruction Reality “Ireland’s imported companies puff out the prospects of striking based on output from ATLAS plate reconstruction software, Cambridge Paleomap Services Ltd. supplies are sourced from the oil, in the hope of attracting investment. North Sea. The possibility of gas supplies The companies and their lobbyists are en- LEGEND: CG: Central Graben, CSB: Celtic Sea Basin, EB: Erris Basin, EOB: East Orphan Basin, to Ireland from these sources being titled to do this. However, what is important FP: Flemish Pass Basin, FSB: Faroe-Shetland Basin, HB: Hatton Basin, HDB: Hopedale Basin, restricted is very remote.” to note is that, contrary to what the oil lobby JB: Jeanne d’Arc Basin, LB: Laurentian Basin, MB: Møre Basin, PB: Porcupine Basin, RB: Rockall (www.bordgais.ie/corporate) would have us believe, Ireland is surrounded Basin, SB: Scotian Basin, SH: Sea of Hebrides Basin, SLB: Saglek Basin, SPB: Southern Permian See also: ‘Security of supply’, page 25. by a cloud of promising areas: experienced Basin, ST: Slyne Trough, VB: Vøring basin, VG: Viking Graben, WAB: Western Approaches Basin, exploration companies have seen fit to spend WB: Whale Basin, WOB: West Orphan Basin.

6 7 large sums of money on each of these in the in the light of new data, or reprocessing of ex- gramme. Most of the grey blocks on the map knowledge that the possibility of a commer- isting data; also in the light of new technologies were awarded in the November 2011 licens- cial find exists there, and that the potential and rising oil and gas prices. ing round. prize far outweighs the risk. c.) Commercial discovery 2) An exploration licence grants the exclusive A 2006 report for the DCENR estimated the (denoted by GREEN labels on map) right to explore for petroleum in a specified quantity of oil and gas in the Atlantic Margin If successful, the appraisal phase ends with area. There are three types of licenses avail- off Ireland’s west coast at 10 billion barrels of a Declaration of Commerciality and the proj- able, as follows: oil equivalent (BBOE). This is the origin of the ect moves into the development phase. Only a) standard exploration licence (light blue often quoted figures of €420 and €540 billion five discoveries in Irish territory have been de- on map): issued for a period of 6 years for an (the values of 10 BBOE at different times). clared commercial to date, the most recent area with water depths of up to 200 metres. While this is a huge figure, it applies only to at time of writing (July 2012), Barryroe off b) deepwater exploration licence: issued For how long can the Atlantic Margin. As can be seen from the Cork. Development implies the bringing of the for a period of 9 years for an area with wa- map, the majority of discoveries are in the underground oil/gas field to the ‘production’ ter depths exceeding 200 metres. (None are a company sit on Celtic Sea, to the south of Ireland. phase, i.e. the point where it is ready to be shown on the map. The block that contains the extracted and sold. Corrib and Barryroe are Corrib field was the only one to be issued as a THE PROCESS OF OIL AND GAS EXPLORATION at this stage. Ballycotton, Kinsale and Seven deepwater licence. It is now a lease, shown in a licensed area? (Key to numbered labels on map p.22-23) Heads are in production. red on the map.) c) A frontier exploration licence (dark blue What Ireland’s licensing regime means is a) Prospect, lead or other exploration THE LICENSING PROCESS on map) is issued for an area posing signifi- that a licensing option (LO) awarded in (denoted by BLACK labels on map) (Key to block colours on map pages 22-23) cant logistical difficulties. This type is valid for November 2011 could give the holder the To identify an area where oil and gas might A licence is required to carry out hydrocarbon not less than 12 years and can be extended. exclusive right to control that territory for a be present, existing geological knowledge is exploration. There are different types of ex- total of 47 years: 2 years for the LO, up to used to select areas for closer study. Then, to ploration licences in Ireland. 3) A petroleum lease (red on map) grants the 15 years for a licence, followed by a 30-year build up a picture of the rock layers, and thus exclusive right to produce petroleum from the lease; that is, up until the year 2058. Pro- the likelihood of the presence of oil or gas, 1) First of all, a licensing option can be ap- leased areas, once a discovery is declared com- duction need not begin until 23 years after companies use several methods, for example plied for. Licensing options (LOs) are shown mercial. This can last for 30 years. Production the area was cherry-picked by the company, seismic surveys. These involve generating a on the map in grey (offshore) or dark olive does not have to begin until 6 years after the and the pace of production can be varied shockwave underground using explosives or green (onshore). Typically valid for two years, expiration of an exploration licence. However, to suit the needs of the corporation, which a pneumatic gun. Then detectors ‘listen’ for they give the holder the first right to a future the licenced company is entitled to rely on its are often diametrically opposed to Ireland’s the returning ‘echoes’, and computers create exploration licence for the area in question, own data in assessing commerciality. The li- needs. In the period leading up to a decla- images of the rock layers. Gravitational and subject to completion of a modest work pro- censing terms stipulate that the Minister must ration of commerciality, nobody knows the magnetic surveys are also used. grant the lease if requested. prospectivity of an area but the company itself – the Irish government does not force b) Oil or gas discovery Footnotes the companies to reveal their data to it. (denoted by ORANGE labels on map) The Corrib field represents 1. McInroy & Hitchen, ‘Geological evolution and hydrocarbon potential of the Hatton Basin (UK sector), While nobody knows what the world will If successful, the exploration phase ends with Myth all or most of Ireland’s northeast Atlantic Ocean’ look like in 2058, it is safe to say that oil the drilling of an exploration well which brings offshore gas/oil reserves. 2. Canadian Association of Petroleum Producers, ‘New- and gas will continue to rise steeply in price oil and/or gas to the surface, known as a ‘dis- foundland and Labrador’s Offshore Oil and Natural Gas relative to other commodities. Even in the covery’. The project then enters the ‘appraisal’ The Corrib Gas field Exploration and Production Industry’, at most wildly optimistic energy scenario, with phase, in which the maps of the underground Reality is relatively small, http://www.capp.ca/getdoc.aspx?DocID=176807 a timely transition to renewable energy, are updated using data from the exploration well representing approximately 1% the oil/gas 3. McInroy & Hitchen, ‘Geological evolution and hydrocarbon potential of the Hatton Basin (UK sector), there are certain functions which only hy- and further surveys. These help to determine lo- reserves that are estimated by the Irish northeast Atlantic Ocean’ drocarbons can perform. Despite what the cations to drill further ‘appraisal wells’ to gauge Government and by industry to be under 4. Pp 2-5, at http://www.dcenr.gov.ie/NR/rdonlyres/ oil lobbyists, successive Ministers, and me- how far the oil or gas field extends underground, Irish territory. According to Shell, Corrib 2A154470-B6B1-495B-B268-D5429B747F13/0/ dia commentators say, it is not in Ireland’s and whether it is commercially worthwhile to contains one trillion cubic feet of gas, 1673R002Annexs2Physicalandchemicalaspects_final. interests to gift its oil and gas reserves to develop it for production. Appraisal may take worth around €13 billion. This is equivalent pdf the multinationals for them to use up in the between four and ten years – sometimes longer. to the quantity of gas consumed in the 5. http://www.aapg.org/explorer/2000/10oct/eng- land_explo2.cfm most destructive ways possible. Some discoveries which were deemed not com- every six years. 6. ‘E.g. ‘Chances of striking oil off Irish coast slim’ by mercially viable can be re-appraised years later Fergus Cahill of IOOA, Irish Times 2009

8 9 How do Ireland’s terms compare to those in other countries?

INTRODUCTION field production begins and including the Defenders of Ireland’s licensing terms for oil cost of any unsuccessful wells the company and gas sometimes claim they conform to has drilled anywhere in Irish waters in that international practice. This is not consistent 25-year period. with the facts. Ireland’s approach is unique The terms do not seek any State participa- in terms of both its pro-corporate bias – in tion in development or production. The State particular the ceding of control to private demands no royalities. Furthermore, once the companies – and the extremely low returns to gas or oil is produced, the State no longer has the State. Several international studies have any control over these resources as ownership found that the share of revenues (government of them is transferred in full to private, profit- ‘take’) Ireland receives is among the lowest in making companies with no accountability to the world, less than half that of comparable the Irish people. countries. As well as the issue of government take, other aspects of the licensing terms are THE LICENSING SYSTEM also remarkably skewed in favour of oil com- Ireland’s hydrocarbon (oil and gas) reserves panies. For example, companies which extract are managed on behalf of the people of Ire- oil or gas from Irish waters: land through a licensing system controlled by • are not required to supply it to the Irish the Petroleum Affairs Division (PAD) of the market (meaning Ireland remains vulnerable Department of Communications, Energy and to global supply issues); Natural Resources (DCENR). Licences grant- • are not required to give discounted rates if ed under this system are governed by either they do sell it in Ireland; the 1992 Licensing Terms, introduced by • are not required to bring it ashore in Ireland; ministers in Charlie Haughey’s governments, • are not required to souce services, equip- or the 2007 Licensing Terms.1 Prior to 1992, ment or staff in Ireland; licences had been dealt with under the 1975 • can write off 100% of costs against tax, in- Licensing Terms, introduced by Labour’s Jus- cluding costs incurred up to 25 years before tin Keating. See ‘How we got here’, page 30.

Ireland’s ‘take’ can be do so. Unless the terms are changed now, Myth increased later, once more oil all or most of the areas likely to contain oil and gas is found. and gas will have been licensed exclusively Oil company executive John Craven told the to companies for decades to come. The (April 15, 2012): “The Irish companies will have exclusive control over Government need to create an environment how much oil is produced and when and where people are happy to come in and drill to whom it will be sold. Moreover, data on and to park the tax issue until people are on which finds are significant can be withheld production, when there is something to tax.” by the company. The Petroleum Affairs Division has acquiesced in the withholding of Licences already offered this information, thus denying to the public Johnston, Daniel: ‘Changing fi scal landscape’, in the Journal of World Energy Law & Business, Reality by the Government can be information relevant to the debate about 2008, Vol. 1, No. 1 (http://jwelb.oxfordjournals.org). Following Minister ’s minor changed, but only with considerable political Government policy on offshore exploration. changes to licensing terms in 2007, Ireland’s ‘take’ – according to Johnston – is still well below will and some risk. In reality, future Irish See article by economist Colm Rapple: 30%. When the extraordinary tax write-offs allowed under Ireland’s terms are taken into account, governments will be extemely reluctant to http://colmrapple.com/?p=86 this will be considerably lower than Johnston’s estimate (see box on page 12).

10 11 The 1992 terms came about when Keating’s What % of revenue from the sale of Irish terms were changed in the late 1980s, initially by minister Dick Spring, but then more dras- oil or gas will return to the Irish State? tically by minister Ray Burke following inten- sive lobbying by oil exploration companies.2 There is a perception that the Irish exchequer worth €9.5 billion and that the tax revenue Enterprise Energy Ireland before that com- These were then further amended in 1992 by will earn a quarter of the value of oil or gas from the field would be in the order of €1.7 pany was bought by Shell. Speaking at a finance minister . See: ‘How we extracted from Irish territory. This is not the billion. That’s just under 18%. public debate at the IFI cinema in Dublin on got here’, page 30. case. The figure of 25% is a corporation tax However, one must assume that the De- 4th December 2010, he said that, accord- rate applied to the profits a company declares partment of Energy and Natural Resources, ing to Wood Mackenzie’s 2003 study, “the RETURNS on the sale of Irish oil or gas. After making a which wrote that ministerial reply, would be overall tax bill that Corrib would have paid if Financial returns to the Irish State from ex- 100% write-off of costs, including the cost of inclined to make the most optimistic predic- it had gone ahead when it was supposed to traction of Irish oil and gas are extremely low unsuccessful wells drilled elsewhere in Irish tion possible about tax take, considering the would have been €340 million.” O’Cathain by international standards. According to a re- waters in the previous 25 years and costs in- controversy around Ireland’s management of subsequently confirmed this information port commissioned by the Irish Government, curred in various countries, how much tax will its resources. On the other hand, a prediction to a journalist, who published it on www. “the current fiscal system ... yields among the an oil company actually pay under Ireland’s made by Shell, or by consultants on its behalf, irishoilandgas.com lowest government take in the world”3. A for- very unusual licensing terms? would likely be much closer to the truth, espe- That’s just 3.6% of the field’s value as giv- mer director of Statoil Exploration (Ireland), To date, no oil or gas has been extracted cially if it was confidential. A private review by en by the Department five years later. How- Mike Cunningham, told in under the 1992 or 2007 licensing terms, so industry experts would factor in all the costs, ever, the price of gas did increase during 2000 that no other country in the world had we have no concrete example. However, the write-offs and loopholes that Shell’s skilled those five years, so the value of the field or given such favourable terms to oil companies Corrib Gas project provides an intriguing in- accountants would avail of. gross revenue in Wood Mackenzie’s projec- as Ireland4. The article continued: “He com- sight into what this tax take might be. Just such a confidential study of the Corrib tions would have been lower than €9.5 bil- pared this to the situation in the Faro Islands, Let’s start by looking at the Government’s project was carried out for Shell by globally re- lion. But how much lower? O’Cathain would where no company can operate without agree- prediction. In 2008, Mayo TD spected energy consultants Wood Mackenzie not reveal what the 2003 study’s estimate ing to a minimum take by the Government of asked the minister in charge of the project, in 2003. The study is not publicly available, was for gross revenue; in other words, how 55% through taxes and royalties. ‘In Norway, Eamon Ryan, about the value of Corrib. In but figures from the study have been provided much Wood Mackenzie predicted that Shell the government got up to 79% on some of the a written reply on 24th September 2008, by the man who was in charge of the Corrib would sell the gas to Bord Gais for. older fields,’ he said.” Meanwhile, economist the minister said the 800-900 billion cubic project until 2002. According to Bord Gais, the price at Colm Rapple has described Ireland’s terms as feet of gas estimated to be in the field was Brian O’Cathain was Managing Director of which they buy gas approximately doubled “decidedly soft by international standards”5. between 2003 and 2008, meaning the field A 2012 report by a Joint Oireachtas Commit- was worth around €5 billion at the time of tee on oil and gas exploration also referred to Approximate State share in revenue from the the study. On this basis, the figures sug- this reality, placing Ireland at the bottom of a sale of gas from Corrib, according to projections gest that, had Corrib Gas come on stream league table of dozens of countries, with re- in a private 2003 consultants’ study for Shell; on schedule in 2005, approximately 7% of gard to financial returns, and recommending 7% below: former head of the Corrib project Brian the revenue from the sale of the gas would an increase in the latter. O’Cathain, who revealed the figures have returned to the exchequer in tax. Re- Source: www.irishoilandgas.com member that what we’re talking about here IRELAND IN A GLOBAL CONTEXT is the State’s share in the earnings from the The Department of Energy and Natural Re- sale of Irish gas to Irish consumers (via Bord sources has frequently boasted about the “at- Gais) at the international price for gas. tractiveness” of the Irish licensing system7. Finally, you might wonder why Brian This is demonstrated by a table contained in a Company profits and costs, including O’Cathain was quoting from this study. The report carried out for the Department by con- the costs of other unsuccessful wells answer is that he was arguing that delays to sultants Indecon8. Ireland’s position is starkly drilled in Irish waters the Corrib project had cost the exchequer illustrated in a study by international petroleum millions of euro in lost tax revenue. Remark- expert Daniel Johnston (see diagram, page 11). 93% ably, he claimed that Corrib would not now In 2008, Johnston compared 45 fiscal systems pay any tax at all, because the long delays in 40 countries. The graph reflects the fact would mean yet more costs that Shell could that, even allowing for the PRRT introduced in write off against tax. 2007, the maximum government take in Ireland

12 13 is well below 30%. The results show just how June 2007, minister Eamon Ryan introduced out of step Ireland is with the rest of the world. new licensing terms, presenting them as a sig- Ireland’s is the lowest take on the graph; even nificant overhaul of Ireland’s licensing system. the second lowest country, Peru, has a rate of They were reported as such in the mainstream government take of more than 40%. news media, with the implication that 40% of Notice how, in 38 of the 45 fiscal systems oil and gas wealth would return to the exche- surveyed, government take was greater than quer. Unfortunately, the reality is very different. 50%, nearly twice that of Ireland, while more The new terms introduced a Profit Resource than half of the fiscal systems (28) resulted Rent Tax (PRRT), levied on the net profits, i.e. the in government take greater than 60% – more profits remaining after the corporation tax had than twice the rate of Ireland. Ireland’s take been paid (see box on page 17). In exceptional is roughly half that of its neighbours, the US cases, where a field is highly profitable, this and the UK. As will be seen below, Ireland’s could be up to 15%, but in the case of smaller terms are well out of line with those of other and medium-sized fields, it would be zero. countries, and not just oil-rich countries but Given the extraordinary value of fossil fuels, even with the poorest. these taxes still remain extremely low by in- ternational standards. Eamon Ryan’s changes 2007 TERMS made no reference to royalties, equity share, Following public protest over the prospect of carbon taxes nor any proposal to ring-fence From ‘Expert Advice on Review of Irish Petroleum E&P Licensing Terms’, a 2007 report by such poor returns to the exchequer, the Depart- these taxes for investment in renewable en- consultants Indecon for the Irish government (www.dcenr.gov.ie) ment reviewed the 1992 Licensing Terms. In ergy systems. In addition, Eamon Ryan’s terms still in- waters, costs incurred in other countries and clude the tax write-offs that allow the com- the cost of dismantling the project. In short, Oil and gas in Ireland’s simply cherry pick the choicest areas. pany to whittle down their declared profits, so this means the State will not earn anything Myth hostile waters are like Although it is true that the exploration that the corporation tax and the new PRRT close to 25% of the value of the field. The tax needles in a haystack. If our fiscal terms process involves the drilling of more ‘dry are calculated on relatively low amounts. Fi- write-offs are so generous that – according to really respresented a giveaway, more wells’ than ‘gushers’, this risk is calculated nally, the 2007 terms only apply to fields li- figures provided by the former head of Corrib companies would be exploring here. in advance in light of the above data, and censed after January 1, 2007. Even if a field Gas project – the State will end up receiving balanced against the potential rewards and goes into production in 2020, for example, as little as 7% of the revenue from the sale Ireland’s waters are the likelihood of a find. In the long term the the 1992 terms will still apply if the original of Irish gas or oil to Irish consumers (see box Reality becoming more attractive oil giants cannot lose. This is why their prof- exploration licence for the field was granted on page 12). for exploration year by year. Impelled by its are so phenomenal, for instance Shell’s before 2007. commercial pressure, by rapidly developing profits of €2.5 million per hour in 2011. DIFFERENT TYPES OF FISCAL SYSTEM technology, and by the approaching exhaus- Although the industry is very skilled at GOVERNMENT ‘TAKE’ Johnston’s 2008 study is interesting for an- tion of fields that were more accessible presenting a poor mouth, industry lead- “Government take” is defined as the total per- other reason. In the table, notice that he dif- (such as the North Sea giants), global explo- ers speak with a very different voice when centage of revenue from oil and gas produc- ferentiates between three types of approach ration is constantly expanding into deeper talking amongst themselves, for example in tion and can take the form of tax, royalties, to gas and oil management by governments: and more remote waters. the industry press. Holders of Irish licences bonuses or some other method of extracting • Licensing System (Ireland uses this type, Imaging techniques have advanced great- regularly boast that Ireland’s waters hold revenue6. Ireland uses only one means of ex- also known as a Royalty/Tax system): the gov- ly, but the licensing terms have scarcely great promise, and that the Irish regulatory tracting revenue from our oil and gas: a tax ernment transfers ownership of the resource changed in two decades. Seismic, magnetic and fiscal regime is the “best in the world” on profits from their sale. A 25% tax rate is to the company, in return for the payment of and gravitational surveys from land, ships, for the industry. applicable under both the 1992 and 2007 returns from the sale of the product; aircraft and satellites are integrated with Energy costs are expected to increase Licensing Terms. However, the terms allow • PSCs (Production Sharing Contracts): gov- complex data from other wells into sophisti- enormously in coming decades, but the the company to offset all costs associated ernment retains ownership but gives the oil cated mathematical models to give a clearer Irish state is handing over exclusive licences, with the oil or gas project before they declare company a right to receive a share of produc- picture than ever before of which areas are which can be sat on for up to 23 years be- profits and they can include costs “incurred tion. likely to hold oil and gas. Many surveys are fore starting production, on giveaway terms in the 25-year period prior to commence- • Service Agreements: company is paid an paid for by the taxpayer, just one of many established 20 years ago by Ray Burke and ment of field production”, including the cost agreed fee for its exploration, development subsidies to the industry. Companies can Bertie Ahern. of other unsuccessful wells drilled in Irish and production services.

14 15 Options for Ireland

If Ireland is to enjoy any real benefit from its sipher declare that contract terms are often potentially vast oil and gas reserves, serious negotiated and renegotiated as political and changes are required before any further petro- economic conditions change, or as the per- leum leases are awarded or additional acre- ception of prospectivity in a region changes. age is opened up for licensing. Separately, the When Bolivia, Russia and others renegotiated Government could impose a moratorium on terms in recent years in order to reduce the exploration licences and leases already grant- companies’ share, the industry warned that ed before Ireland gives away any more of its those countries would be shunned. However, resources. the companies ultimately accepted the new Some members of the Government and the terms because the profits were still so hand- oil industry lobby argue that changes can’t be some. made because either a) we’ll scare away the Similarly, Daniel Johnston (2008) acknowl- oil companies, or b) the current licensing sys- edges the strong position of states and their tem prevents it. ability to change their fiscal systems, arguing However, opportunities for change lie in that resource management has a “change- both the 1992 and 2007 Licensing Terms for able nature”. He writes that there are so many Other countries typically extract revenue via several sources. Table shows Norway’s net offshore oil and gas exploration, development changes currently underway, it is difficult to government cash flow from Petroleum activities (source: Norwegian Public Accounts 2009 and production, through which the Minister keep track of them all. “Oil companies, par- and SDFI account figures) for Energy and Natural Resources has the ticularly the majors, are struggling to hold on right to increase money terms, grant authori- to their position in face of the overwhelming The differences between these three are In summary, Ireland’s licensing system fails sations, impose conditions, suspend or inter- pressure in almost every country in which crucial, as under both the Production Shar- on several grounds: rupt activities, and revoke authorisations. In they operate”11. ing Contracts and Service Agreements the • Extremely low rates of government take, their research for the US Minerals Manage- Every country except Ireland, that is. government retains strong control of the gas among the lowest in the world. ment Service (2004, 2006), Kaiser and Pul- Ireland, however, can change its approach and oil when it has been produced. On the • No State participation in exploration, devel other hand, under the Licensing (or Royalty/ opment or production. Tax) System, ownership of the State’s gas • Ownership and control of Irish gas and oil and oil is transferred to the oil company that is transferred to international oil companies, between 1.5 and 3.0 extracts it. However, other countries using which means: What is PRRT? • An additional the Royalty/Tax System differ from Ireland – no guarantee of resources being sold to 10% where the prof- in that: the Irish market; PRRT, or Profit Resource Rent Tax, was in- it ratio is between • they receive much higher rates of return; – no guarantee that the oil or gas will be troduced by Minister Eamon Ryan (pictured) 3.0 and 4.5 • many are guaranteed a supply of their own landed in Ireland; under the 2007 Licensing Terms. PRRT is • An additional gas and oil; – no guarantee of jobs or investment in Ire- payable on profits, subject to a profit ratio 15% tax where the • many extract royalties or bonuses as well land; which is defined as “the cumulative after tax profit ratio exceeds as tax, while Ireland extracts only tax (the – Irish consumers must pay full market pric- profits on the specific field divided by the 4.5 US government has received over $65 billion es for Irish resources. cumulative level of capital investment on Considering that in bonuses for the Outer Continental Shelf • No consultation with the public about how the specific field”18. Once after-tax profits companies can off- since 1953.9) Ireland’s gas and oil is, or should be, man- (against which costs have already been off- set all costs, and then have the ratio of their A 2006 study for the US government states aged. set) are divided by the level of capital invest- capital investment calculated against the that Production Sharing Contracts are likely • No public debate around the speed at which ment for the overall project, companies may remaining profits, it appears that only the to be the preferred contract type in new acre- oil and gas in Irish territory should be ex- pay a PRRT of between 5% and 15%, based largest, most profitable fields will see com- age rounds10. Not only is Ireland’s approach ploited – or whether it should be exploited on the following ratio: panies paying the PRRT. The 2007 terms to licensing not common practice interna- at all – given the major contribution fossil • No change where the profit ratio is less make little real difference. If anything, they tionally, it almost falls off the bottom of the fuel consumption makes to global climate than 1.5 serve to reinforce how badly Ireland fares chart when compared to other countries. change and environmental degradation. • An additional 5% where the profit ratio is from extraction of its hydrocarbon reserves.

16 17 to how its resources are managed and there According to Norway’s Ministry of Petro- are a wealth of options available. We consider leum and Energy, the state’s net cash flow three possible options here – improving the from the petroleum sector amounted to 27% existing licensing system; introducing a con- of total revenues in 2009. State revenues tractual system (production sharing contracts from this sector are allocated to a special and service contracts); or utilising a hybrid fund known as the ‘Government Pension Fund system. It is arguable that, whichever model – Global’, set up in 1995. By the end of 2009, is used, it should be subjected to a compre- the value of this fund was NOK 2,640 billion13 hensive process of public consultation and (around €325 billion). As Norway’s population engagement in decision-making, giving peo- is 4.9 million, the fund is worth €66,000 per ple in this country a say in how Irish gas and capita, making it the largest capital reserve oil is managed. per head of population of any nation. “Throughout nearly 40 years of business 1. Overhaul the Irish licensing system activities, the industry has created values of Under a licensing system, a form of which is approximately NOK 8,000 billion (€980 bil- used in Ireland, the State transfers ownership lion) in current terms”14. and control of its oil and gas to the company Following Norway’s example, Ireland could that produces it. This company can be a mul- modify its licensing system and increase its tinational oil company or a state oil company. tax rate. Ireland could also introduce: A licensing system is also used in countries • royalties; such as New Zealand, US, UK, Denmark and • a ‘State Direct Financial Interest’; Norway, with a key difference being much • a requirement upon companies to guaran higher returns to these states. tee supply to the State at reduced prices; • a State-owned oil company to also produce Participation of contractors varies between By using the INPC, or establishing a new na- Learning from Norway resources, ensuring increased returns to 81.5% and 87.5%. Under a PSC, contractors tional oil company, Ireland could enter into Under Norway’s licensing system, corpora- the State with additional benefits accruing are subject to a corporate income tax of 25% contractual agreements with international tions are liable to pay a tax rate of 78%. Of through the use of local services, workforce and royalties of between 12.5% and 18.5%. oil companies. Critics might argue that the this, 28% is the ordinary tax rate and 50% is and materials. Under the Service Contracts, the contractor INPC lacks the capital, human or technical a special tax derived from the extractive activ- This would leave plenty of profit to be made commits to Petroecuador to provide explora- resources for this. However, Ireland could fol- ities. This is more than three times the level of by companies, while bringing Ireland into line tion and exploitation services, using its own low Norway and Statoil’s example and devise taxation in Ireland under the 1992 licensing with other countries. economic resources, and the contractor has a contract in which INPC staff are trained by terms. In addition, corporations are subject to invest the necessary capital and use the the oil companies with which they would share to a number of environmental taxes. In Nor- 2. Introduce a contractual system. equipment required for such contracts15. A production, becoming involved in all the- way, the net government cash flow from pe- Under a contractual system, the state retains percentage of production belongs to the gov- phases of a project from exploration, through troleum activities in just one year (2008) was ownership of the oil and gas, and is involved ernment and companies are subject to a high- development and into production. The INPC’s more than €50 billion. What makes Norway’s in production either through sharing produc- er income tax rate of 44%. In addition, all share of profits would go towards financing model of resource management especially tion, i.e. production sharing contracts (PSCs), companies are required to make other finan- the development of the INPC. Upon develop- valuable is the state’s direct participation in via its national oil company and international cial contributions, including ‘compensation ing the necessary expertise and resources, exploration, development and production. oil companies, or by allocating service con- for public construction’, water and minerals the INPC could then become a partner in pro- This takes place via the State Direct Financial tracts to companies. Countries using a con- contribution, provinces contribution, fund for duction through the implementation of pro- Interest (SDFI) and also via Statoil. Originally tractual system include Ecuador, India, Ma- the development of the Amazon provinces, duction sharing contracts, or could conduct a state company, Statoil is still 67% owned laysia, the Philippines and China. fund for the development of the ecosystem of operations on its own. by the Norwegian government12. The SDFI is the Amazon region, and environmental war- In countries such as Mexico, Iran and managed by Petoro AS, a state-owned corpo- Ecuador’s contractual system ranties16. Venezuela, the state produces its resources ration, and the percentage of state participa- Ecuador uses PSCs and service contracts, In adopting the Ecuadorian model, Ireland through its state-owned oil companies. While tion is decided when licences are awarded. ensuring significant economic benefits for could make use of the existing State-owned the state may engage multinational compa- For example, if a 40% state participation is the country. International oil companies par- Irish National Petroleum Corporation (INPC). nies to perform specific services, the state re- agreed, Petoro will contribute to 40% of the ticipate – with Petroecuador (the national oil This company was established in 1979 but mains in control of operations at all times. costs and receive 40% of the profits. company) – in exploration and production. was precluded from engaging in production. Service contracts are another option for

18 19 ww.shelltosea.com/booklet ww.shelltosea.com/booklet w (see map, p. 22) p. map, (see about sources: sources: about online spreadsheet, with detailed information information detailed with spreadsheet, online These tables and map are accompanied by an an by accompanied are map and tables These (see map, p. 22) p. map, (see Number Number map, on 20 page Other areas in Irish territory territory Irish in areas Other 2 2 Ireland’s most significant prospects & discoveries discoveries & prospects significant most Ireland’s Number Number map, on 2 page Number Number map, on 2 page 20 21 about sources: sources: about detailed information information detailed These tables and map map and tables These ww.shelltosea.com/booklet ww.shelltosea.com/booklet are accompanied by an an by accompanied are online spreadsheet, with with spreadsheet, online w ee tables on pages 20-21 20-21 pages on tables ee prospects and discoveries and prospects S for more information on these these on information more for Oil & Gas Exploration & Discoveries Ireland 2012 Ireland Discoveries & Exploration Gas & Oil

22 23 ried out by both international oil companies payer should invest billions of euro in an in- the share that the State takes. For smaller The Corrib field will supply and the Irish State. If a licensing system is tensive exploration effort at this time. Instead, finds, the State could take a smaller share. Myth 60% of Ireland’s gas needs used, the current system under the 1992 this should be left to the industry.” and 2007 licensing terms would have to be This is a false argument. In order to take Footnotes The gas in Corrib – one replaced with one which brings real benefits a share in an oil or gas field discovered by a 1. The 1992 and 2007 Licensing Terms are available at: Reality trillion cubic feet or ap- to people in Ireland. private company, the State would not need to www.dcenr.gov.ie 2. Centre for Public Inquiry, 2005, pp.57-60. prox 30 billion cubic metres – is equivalent have shared the risk involved in finding that 3. Indecon, 2007, p. 15. to the quantity of gas consumed in Ireland Following Peru’s example field. The State can simply issue exploration 4. ‘Region fears Corrib oil pipeline will pass it by’, Irish every six years. According to Bord Gais, Peru combines a licensing system and ser- licences to private companies on the basis Times, 13/10/2000. around five billion cubic metres is con- vice contracts. Exploration and production is that when a discovery is made, the State will 5. www.colmrapple.com sumed in the Republic of Ireland each year. conducted under licence or service contracts step in and take a percentage share in the 6. US Government Accountability Office, 2007, p. 11. What Shell has said is that Corrib “will granted by the government. Under a licence ownership. 7. See reports: Fox, 2003; Indecon, 2007. supply up to 60% of Ireland’s gas needs contract, the contractor pays a royalty, where- These resources belong to Ireland in the 8. Indecon, 2007, p. 5. during peak production and is estimated as under a service contract the government first place. Thus, it is entirely reasonable for 9. Johnston, 2008, pp. 49-50. to have a field life of between 15 and 20 pays remuneration to the contractor. However, the State to retain ownership of a percentage 10. Kaiser and Pulsipher, 2006, p.73. years.” (www.corribgaspipeline.com) in Peru, a licence contract does not imply a of an oil or gas field discovered by a private 11. Johnston, 2008, p.38. 12. Ministry of Petroleum & Energy, Norway, 2010, “Peak production” will be short-lived. transfer or lease of property over the area of corporation, while granting that company a p. 21. Shell’s careful phraseology has had its exploration or exploitation. By virtue of the generous share the field they discover. 13. Ministry of Petroleum & Energy, Norway, 2010, p. 14. intended effect: media reporting has sim- licence contract, the contractor acquires the Indeed, this was the model used in Ireland 14. Ministry of Petroleum & Energy, Norway, 2010, p. 14. plified Shells’ claim to: “Corrib will supply authorisation to explore or to exploit hydrocar- between 1975 and 1992. Minister Ray Burke 15. Ernst & Young, 2009, p. 97. 60% of Ireland’s gas needs for 20 years”. bons in a determined area and Perupetro (the abolished this State share. 16. Ernst & Young, 2009, pp. 99-100. In fact, if Shell’s figures are accurate, a entity that holds the Peruvian state interest) This shared ownership could operate on a 17. Ernst & Young, 2009, p. 219. field life of 20 years would see Corrib sup- transfers the property right in the extracted sliding scale: the bigger the find, the greater 18. Ernst & Young, 2009, p. 124. plying up to 15% of Ireland’s gas needs hydrocarbons to the contractor, who must pay over its lifetime. a royalty to the state17. Companies are also Furthermore, Shell is at liberty to export subject to a corporate income tax of 30%. the gas via the UK. This means Bord Gais must bid against buyers in other countries, CONCLUSION which in turn means consumers here will Clearly, there is a wealth of options available Security of Supply pay the same for Corrib gas as they cur- to Ireland. The experience of other countries rently pay for gas imported from Norway. provides several models which Ireland could The question of “security of supply” is the pipelines between Ireland and Scotland. What consider. subject of one of the great contradictions in this means is that Bord Gais must bid against The current debate around Ireland’s fiscal Irish government policy on oil and gas. A cen- buyers in other countries in order to secure gas terms has, to some extent, been falsely sim- tral argument in defence of Ireland’s unusual from Irish waters. Irish consumers will pay the Ireland. By offering some incentives (such plified by the Government and oil lobby to one licensing terms has been that “attractive” full international market rate for this gas. as slightly higher rates of profit oil), the Irish question: can Ireland can afford to invest the terms are needed to encourage exploration Furthermore, not only are companies under State could contract oil companies to carry hundreds of millions of euro required to ex- and thereby secure a domestic supply of oil no obligation to supply the Irish market: they out the exploration, development and produc- plore for oil and gas? This question is wilfully and gas. This argument has no basis in re- are not even required to land the oil or gas tion work, while ensuring strong State control misleading. ality. Because Ireland’s licensing terms were in Ireland. This makes a mockery of another and meaningful financial returns. For example, during a Dáil debate on the drafted to meet the wishes of the oil industry, central tenet of government policy: namely, issue in April 2011, Minister for Energy and there is no obligation on companies who find that further oil and gas discoveries will cre- 3. A Hybrid system Natural Resources, Pat Rabbitte dismissed oil or gas in Irish waters to supply it to the ate jobs, infrastructure and “investment” in A third option is a hybrid system, with el- proposals for State involvement in the sector: Irish market. In other words, Ireland’s licens- Ireland. Oil companies operating in Irish wa- ements of licensing and contractual sys- “At €80 to €100 million spend per hole ing terms do not provide any improvement in ters plan to export oil directly from the rig. tems. This could include production shar- drilled I am unsure where the money could our security of supply. Oil extracted from Irish waters is unlikely ever ing agreements alongside improved terms be found for that at this time ... Having regard In the case of Corrib Gas, for example, the to come ashore in Ireland, which would mean and conditions under a licensing system. to the high risk of unsuccessful exploration, it Shell-led consortium has the option of export- no jobs or investment in Ireland, no new in- Exploration and production would be car- is difficult to make the case that the Irish tax- ing the gas via one of three interconnector frastructure, no oil supply to the Irish market

24 25 and no protection against global price rises. North Sea gas fields. The remainder comes In the case of gas, there is also genuine doubt from the Kinsale gas field. According to Bord over whether future discoveries in Irish waters Gais, “Ireland’s imported natural gas supplies will come ashore in Ireland. are sourced from the North Sea. The possi- Our licensing terms weaken rather than bility of gas supplies to Ireland from these strengthen our security of supply. sources being restricted is very remote.”2 However, all of our imported gas does reach THE GLOBAL PICTURE us through one pipeline in Scotland. There is a Security of energy supply has become a cru- tiny risk that supply could be interrupted due cial issue in today’s world. We are now either to damage to this onshore pipeline, though close to, or have just passed, “peak oil” – or there is a “very low probability” of this, ac- the peak carbon resource production point. cording to John Fitzgerald of the ESRI3. An From now on, reserves of commercially ex- onshore pipeline can be repaired much more tractable oil and gas will decline and their quickly than an undersea pipeline. There are cost will rapidly rise. Thus, it is becoming three undersea interconnectors between Scot- more important that a country has its own land and Ireland, one to Northern Ireland and reserves or else a guaranteed supply from two to the Republic. Ireland’s oil and gas and climate change nearby countries. As an island on the periph- The government/oil industry might argue ery of Europe, Ireland’s security of supply is that, if the supply of gas from Russia to west- Any discussion of fossil fuel extraction must and potentially areas of Ireland’s northwest, seen as particularly urgent. ern Europe were interrupted, then western consider climate change. All fossil fuels add where hydraulic fracturing or “fracking” may be Ireland has become highly dependent on European demand for North Sea gas would carbon dioxide (CO2) – as well as other pol- used (see page 31). gas, both for home heating and for electric- suddenly increase; and that this would put lutants – to the atmosphere when they are The energy use and carbon output of hyper- ity generation. In 2009, 57% of our electricity Ireland in a vulnerable position, if we did burned. This is another argument in favour consumerist societies such as Ireland are well was generated by burning gas.1 not have a domestic supply. However, as we of Ireland retaining control of its oil and gas above the global average. We don’t need nearly shall see, Ireland’s licensing system does not deposits, rather than passing that control to as much energy as we currently consume. On WHERE DOES OUR GAS COME FROM? protect against this eventuality: if a situation private corporations. But does it also mean average, each person in Ireland uses the equiva- There is a widely-held belief in Ireland that arose in which Ireland had to bid against oth- that it would be a mistake to extract any of lent of 3,700 kg of oil per year. our gas is sourced in Russia or the Ukraine. er European states for North Sea gas, then we them? For the sake of the planet, would we be Significant energy use/emissions reduc- Debates about the Corrib Gas project and the would also be bidding against those countries better off leaving them in the ground? tions can be made by reducing consumption wider issues around Ireland’s offshore oil and for gas from Irish fields. The overwhelming scientific consensus of manufactured goods, improving energy gas issue often feature warnings that Ireland on climate change is that human activity conservation etc. We can also develop more is “vulnerable” to events in eastern Europe. COMPANIES CAN EXPORT OUR GAS & OIL is the cause of the rapid increase in global renewable energy sources. However, the real- We must get the gas ashore quickly, we are One of the many fundamental deficiencies average temperatures over the past several ity is that such changes will take time and a told, as the “pipeline from Russia” might be in Ireland’s management of its oil and gas decades. Scientists are agreed that, un- transition phase is inevitable. cut off at any moment. resources is that there is no requirement on less drastic steps are taken, we are facing Above all, it makes no sense for the deci- In fact, Ireland does not source any of its exploration companies to sell Irish oil and gas increases in temperature that will have sions affecting climate change to be in the natural gas from eastern Europe, but it is to the Irish market. They are at liberty to sell catastrophic consequences for human and hands of private corporations. Their only goal hardly surprising that this myth enjoys such it abroad. They can pump our gas through other life on the planet. Despite this, the is maximising profits for their shareholders; widespread currency. Then Minister for en- “interconnector” pipes to the UK and beyond. governments of the world have failed to they will always opt to extract and burn fossil ergy and natural resources Noel Dempsey These interconnectors were laid primarily to agree anything approaching a solution. fuels as rapidly as possible with no regard even used it in an comment piece published bring gas from the UK to Ireland, but they are Climate change is highly unequal in its ef- for what dangerous impacts this might have, in The Irish Times on September 8th, 2005: designed so that they can, if required, facili- fects. The people who are worst affected live either in terms of extraction or pollution “Our natural gas is imported through Britain tate the export of gas. In the case of crude oil, in developing regions of the world; they have caused by consumption. from some of the most unstable regions in the companies can choose to pump oil directly contributed little to the problem. The enormous The need for Ireland to reduce emissions the world.” into tankers at the rig for immediate export. energy demands of the developed world, and that contribute to climate change is yet So what are the “unstable” regions through These companies are not even required to the resulting scramble for fossil fuels, also have another compelling reason for the ownership which Ireland’s gas is imported? The answer land the oil or gas in Ireland. An example is harmful consequences for people who live close and control of our energy resources to be is that more than 95% of Ireland’s gas is im- the Dalkey Prospect off Dublin, operated by to the point of extraction, such as around the in the hands of the Irish people rather than ported and all of this comes via Scotland from Providence Resources, a company controlled Corrib Gas project in north Mayo (see page 33) private corporations.

26 27 by media baron Tony O’Reilly and his family. ment.”8 In other words, if the company was Providence estimates it contains up to 870 proposing to pipe the gas away from Ireland, Further oil and gas jobs, no infrastructure and no supply to the million barrels of oil, a third of which might the Minister could choose not to approve the Myth discoveries off the Irish Irish market. be “recoverable”. Providence has stated that project. coast will lead to a thriving industry here, The Dalkey Prospect off Dublin, operated the oil would be loaded into tankers at the rig However, ministers in Irish governments with jobs, infrastructure, investment and by Tony O’Reilly’s company, Providence and exported directly to a refinery abroad.4 have a very poor track record in balancing the a secure domestic supply of gas and oil. Resources, is a case in point. The company This means there will be no change to Ire- interests of people in Ireland against those of This is a reason to maintain Ireland’s plans to drill 6 km from Dalkey Island land’s security of supply. Oil fields in Irish wa- powerful oil companies. It should be cause for “attractive” licensing terms. (pictured): in environmental terms this ters might as well be off the coast of Green- grave concern that, if a multinational corpora- project is dangerously close to the shore land. It will also mean: tion wished to export gas directly from an Irish Ireland’s licensing terms – a spill could reach the shores of Dublin in • no protection against further rises in the field, all it would need to do is persuade a min- Reality do not stipulate that oil or one hour, according to an Oil Spill Contin- global price of oil and gas; ister to approve its Plan of Development. gas found in Irish waters or in Ireland must gency Plan submitted by Providence to the • no onshore jobs; be supplied to the Irish market. Nor do they Dept of the Environment (www.environ.ie). • no new infrastructure. PIPING GAS THROUGH IRELAND FOR require that the oil or gas be brought ashore However, since Providence has said it would What about employment on the oil rigs? In EXPORT in Ireland. In some cases, oil companies probably export directly from the rig, in practice, the workers on these rigs are not Even when gas is piped ashore in the Repub- with prospects in Irish waters have already terms of “inward investment”, the project based in Ireland. An Irish Times article in lic, it can be exported via one of our intercon- stated their intention to export oil directly might as well be off the coast of Malaysia. 2007 about the Corrib Gas rig reported that, nector pipelines to Scotland. Indeed, turning from the field. In other words, they will The economic spin-offs of exploration of the 100 staff, there was “only one Irish Ireland into a “net exporter” of gas is an ele- transfer the oil to tankers at the rig and ship and production in Irish waters will benefit person on the rig, with the majority of work- ment of Government policy. This means Bord it to a refinery overseas. This will result in no countries other than Ireland. ers flying in from Aberdeen.”5 Scotland will Gais will have to bid against buyers in other economic benefits to Ireland: no onshore For more, see ‘Security of supply’, page 25. see more economic spin-offs than Ireland will countries. So, if the international price of gas from oil production here. were to double in the next 10 years, the price Irish consumers pay for gas would double, WILL IRISH GAS BE EXPORTED DIRECTLY even if that gas comes from Irish fields. This FROM OFFSHORE FIELDS? was confirmed by the ESB’s chief executive, Turning to gas, Prof John Fitzgerald of the Padraig McManus, speaking in March 2011: ESRI has warned that companies might con- “It’s an international commodity you know, sider piping gas from Irish waters directly Corrib, we are not going to get Corrib Gas to the UK6. Gas from a field off Ireland’s cheaper than gas from anywhere else... So east coast could be piped to Wales. In rela- we’ll pay the same price as getting it it from tion to gas off the west coast, a radical new the UK.”9 technology is being developed, which would In fact, Irish consumers are likely to pay Ireland sources most of its natural gas Ray Burke and Bertie Ahern two decades allow gas to be shipped directly from the more for gas from Corrib than they pay for im- from the North Sea. Bord Gais bids for this ago, serve to weaken Ireland’s security of field. Floating Liquefied Natural Gas (FLNG) ported gas, according to the Commission for gas against buyers of gas in other countries gas and oil supply, not strengthen it. is being pioneered by Shell for the Prelude Energy Regulation in a July 2011 report.10 and thus pays the going rate on the inter- gas field off northern Australia. FLNG allows national market. Remarkably, the same will Footnotes gas to be processed and liquefied at sea and CONCLUSION apply to gas and oil extracted from Irish gas 1. SEAI, 2010, ‘, 1990-2009’, Dublin transferred to tankers for export.7 Again, this Exaggerated fears over “security of supply” fields unless Ireland’s licensing terms are 2. www.bordgais.ie/corporate would mean no security of supply and no jobs have been used in defence of Ireland’s give- renegotiated. If, at some future date, an in- 3. ESRI, ‘Review of Irish Energy Policy’, April 2011, p.41 or investment in Ireland. away licensing terms. While energy security ternational crisis leads to a shortage of gas 4. www.irishoilandgas.com The Department of Energy and Natural Re- is a hugely important issue for Ireland, our or oil on international markets, the price of 5. www.irishtimes.com/newspaper/finance/2007/0706/ 1183410373036.html sources has pointed out that: “Any future oil/ licensing terms serve to weaken our security these commodities will rise. In such a situa- 6. www.irishoilandgas.com gas production project in the Irish offshore of supply. They allow and even encourage tion, Ireland’s gas and oil fields will be of no 7. Extensive information about Floating LNG technology would require the approval of the Minister companies to export our resources, either via benefit to the country, because the price will can be found via a Google search for the Plan of Development for the project. Ireland or directly from offshore fields. In fu- be determined by international demand. 8. Sunday Times (Ireland), July 3rd, 2011, p.17 The methodology proposed for producing ture decades, when global supply issues are In summary, Ireland’s licensing terms for 9. Speaking on ‘Today with Pat Kenny’ the oil/gas would be central to the Minister’s more acute, Ireland may have fewer resources oil and gas exploration, which remain large- 10. Sunday Business Post, ‘Corrib Gas could push up consideration of a proposed Plan of Develop- as a result of this export. ly unchanged since they were introduced by prices’, July 10th, 2011

28 29 How we got here

We have seen that Ireland’s licensing terms taking a share of the project after a discovery for oil and gas exploration are among the and thus would not have to bear the costs of worst in the world, from the point of view of exploration. benefit to the State. This was not always the The terms envisaged the formation of a case. How did this situation come about? State oil company similar to Norway’s Statoil, Marathon Oil discovered gas off Kinsale, Co. if significant finds were made. They also en- Cork in 1971. Gas was extracted from the field sured that the Government would have full under a one-off deal made in 1973 between access to the exploration data, allowing it to the Government and the company. Senior civil make independent decisions about the likely servants argued that the deal was weighted success of any potential development. too heavily in favour of the industry1. There When oil had been discovered in Norway in was a public outcry which became an issue in the 1960s, the energy companies had played the 1973 general election. A Resources Pro- down the find2. However, the Norwegian state tection Campaign was set up to apply further drove a tough bargain with them, taking up to pressure. The Minister for Industry and Com- 90% of the profits, setting up Statoil and forc- Fracking in Ireland on whether or not to allow it will rest with merce in the new government, Labour’s Justin ing the industry to share its knowledge and Government ministers and the Environmen- Keating, introduced new terms, influenced by technical expertise with Statoil. See page 8. Hydraulic fracturing, or ‘fracking’, is an tal Protection Agency. the Norway’s hugely successful creation of The -Labour coalition lost power in industrial process used to exploit ‘unconven- There are numerous concerns surrounding an indigenous oil and gas industry. The 1975 1977. Keating’s successor, Fianna Fáil’s Des tional gas plays’, areas where gas is this process, including: terms included: O’Malley, was ideologically opposed to creat- distributed throughout the rock layer rather • Environmental damage, air and water pollu- • a 50% maximum State stake in any com- ing a State-owned oil company.3 However, due than concentrated in one reservoir. Fracking tion, in particular drinking water supply; mercial find, to the international oil crisis, he reluctantly involves pumping massive volumes of water • Excessive water usage; • production royalties of 8% to 16% and set up the Irish National Petroleum Corpo- (3 to 5 million gallons plus per well), mixed • Industrialisation of a rural landscape with • production bonuses on significant finds. ration (INPC) in 1979, under pressure from with sand and chemicals, under huge pres- drilling pads on intersections of a 2 km grid; • The standard corporation tax of 50% was a number of oil-producing countries which sure, to open up natural fissures in the gas- • Infrastructure risk caused by a massive in- also applied. would only sell their oil to a state company. bearing rock and allow the gas to be forced crease in HGV traffic and resultant damage Companies were required to drill at least The INPC was precluded from engaging up the well to the surface to be harvested. to roads and increased risk of accidents; one exploratory well within three years and to in exploration or production. As a result the While fracking has been around since the • Long term human and animal health risks; surrender 50% of the original licensed area Irish State did not develop expertise as the late 1940s, recent technological advances • Delaying of the transition to a low-carbon they were granted within four years. Crucially, Norwegians had done. Instead, the Petroleum have led to a huge surge in shale gas exploita- economy; the State would gain a “carried interest” by Affairs Division (PAD) of the Department of tion since 2007. The Bush regime in the US • Economic risks, another short term con- exempted fracking from clean air and water struction boom, followed by a massive bill legislation, which allowed it to proliferate to the taxpayer to clean up the environmen- with a minimal of environmental regulation. tal damage, while ownership of the gas is Fracking has caused environmental degrada- transferred to private companies with a tion and pollution of water supplies across negligible financial return to the State; the US. A 2011 study by researchers at Duke • Risks to Ireland’s tourism industry and to University in the US firmly establishes the Ireland’s reputation as a clean, green food connection between the fracking process and producer. water contamination*. In May, a preliminary study into fracking in Three companies have been given pre- Ireland by the University of Aberdeen for the liminary authorisations to explore for shale EPA identified potential risks to groundwater gas in parts of 12 Irish counties, including purity and risks of tremors or earthquakes. Cavan, Leitrim, Roscommon, Sligo, Ferman- agh and Clare. Five Irish local authorities * www.pnas.org/content/early/2011/05/02/ Justin Keating’s 1975 terms were subsequently dismantled by Ray Burke and Bertie Ahern have voted to ban fracking, but the decision 1100682108.full.pdf

30 31 Industry and Commerce became the ad hoc nance Act, cutting oil industry corporation administrative centre for the oil and gas in- tax from 50% to 25%. The terms provide for dustry in Ireland.4 That industry spent heavily oil and gas to be delivered at ‘market prices’, to lobby Irish politicians. unlike the 1975 terms, which allowed prior Through the 1970s and 1980s, oil and gas approval by the Minister of all contracts for finds in Irish waters were regarded as commer- the sale of gas, and gave the Minister powers cially unviable. Industry sources told the media to require delivery of petroleum to specified there were no big fields. However, people in the purchasers to satisfy national requirements. industry knew that ‘uneconomic’ or ‘sub-eco- The 1975 terms also gave the Minister con- nomic’ fields can become economic, through trol, during emergencies, over supplies of pe- improvements in technology and rising energy troleum. These safeguards were removed with prices. It now appears that substantial oil and the onset of the 1992 terms. This means that gas finds will be made in Irish waters, as de- the State will have to pay full price for all oil tailed elsewhere in this booklet. But when this and gas from its own waters, and will have no happens, the finds will be subject to the legis- control over supply, even in emergencies. lation introduced 20 years ago. Moreover, the new licences allow compa- The substantial changes to the 1975 terms nies to hold onto leases on their licensed ter- were made by energy minister Ray Burke in ritory for up to 30 years in the event of a com- 1987 and finance minister Bertie Ahern in mercial find. Companies are entitled to rely 1992. The new fiscal terms included: on their own data and their own plans in as- • The abolition of royalty payments; sessing commerciality, and the Minister must • A 100% tax write-off against profits on capi- grant the lease if requested.6 tal expenditure for exploration, development With the discovery of the Corrib gas field by and production extending back 25 years be- Enterprise Oil, the industry intensified its lob- fore the start of production; bying. Enterprise bought a table at the Fianna • The abolition of all other State participation Fáil tent at the Galway Races and made large in oil and gas development. contributions to that party. Fianna Fáil Minis- Corrib Gas: a decade of resistance Questions were raised by several TDs in ter for Marine and Natural Resources Michael 1987 about the new terms, described by Woods supported Enterprise’s decision not to INTRODUCTION the State being used to force an inland refinery Labour’s Dick Spring as “an act of economic hire Irish workers (who were unionised) on its We have seen how the oil lobby has created and ultra-high pressure raw gas pipeline onto treason”. Burke defended the changes, saying Petrolia rig, overturning an earlier minister’s a perception that Ireland needs to find and an unwilling community to facilitate the re- existing licensing terms were unattractive to insistence that Enterprise hire Irish workers extract its oil and gas reserves as quickly as moval of a national resource for the benefit of the exploration companies and said he was or lose tax breaks. possible; and how this urgency has been para- a private, profit-making corporation. The pow- ‘gravely concerned” that exploration might In this way the energy companies gained doxically used to bring about licensing terms ers used by the State include the introduction disappear from Irish waters altogether. control over exploration data, petroleum pric- that are overwhelmingly to the advantage of of Compulsory Acquisition Orders (CAOs) for In 2005 Ray Burke was convicted and jailed ing and supply, and even whether to sell the oil private companies, leaving Ireland with a tiny farmers’ land on behalf of private companies on charges arising from political corruption in and gas in Ireland or to export it. Ireland’s oil share of revenue, no security of supply and and the deployment of Gardaí and the Irish office and was found to have received a number and gas reserves have been effectively ceded few benefits. This perceived urgency over en- Navy to suppress opposition. of corrupt payments in the late 1980s. While to energy corporations into the distant future ergy supplies has also played a major and The story of the Corrib Gas project needs to there is no public evidence that he received – or until such time as the Irish people reclaim damaging role in the Corrib Gas saga, allow- be told also because it is an inspiring example payments from energy companies, he did ne- their property and renegotiate the terms, as ing Shell and the Government to falsely por- of how committed people can resist a power- gotiate personally with company executives has been done in many other countries. tray the project as being crucial to Ireland’s ful, but unjust, ‘development’ process that- prior to his introduction of the 1987 terms, national interest. threatens their well-being and lives. In their at times taking the unusual step of meeting Footnotes More importantly, the Corrib Gas project is a non-cooperation with Shell and the State, directly with company representatives in the 1 Centre For Public Inquiry, 2005, page 51 shocking illustration of how the State’s flawed the communities most affected by the Cor- 2 absence of his department officials – and Michael McCaughan, 2008, p.69 approach to managing its natural resources rib project have exposed inappropriate links 3 5 Centre For Public Inquiry, 2005, page 54 against the advice of those officials. 4 Centre For Public Inquiry, 2005, page 56 has a devastating impact on people and the between big business and government, and In 1992, minister for finance Bertie Ahern 5 Centre For Public Inquiry, 2005, page 58 environment. Ireland’s excessively pro-corpo- the violence to which this alliance is prepared introduced new terms within the 1992 Fi- 6 Centre For Public Inquiry, 2005, page 64 rate approach has resulted in all the powers of to resort, attracting support from around the

32 33 world and forcing both State and developer learn of the Pecos River incident, near Carls- to alter their plans. Their research has also bad in New Mexico, USA in August 2000, created and informed a national debate on oil when seven adults and five children had been and gas management. burned to death. They had been camping Residents of northwest Mayo were initially more than 200 metres from the site of the motivated to object to the inland refinery proj- explosion, which occurred in a raw gas pipe- ect due to the threat it posed to their health line, and was determined by investigators to and safety and to the environment. This start- be caused by corrosive chemicals in the raw ed a long process of research by several local gas, poor maintenance by the company and people, who discovered that, although they lax oversight by regulators. were being required to make sacrifices, includ- ing facing new risks, supposedly for the com- THE ‘WRONG SITE’ mon good, almost no benefit would accrue to In 2000, local residents took the first steps Ireland from the gas that would pass at high in what would become a long and difficult pressure under their fields and roads. This is but inspiring campaign when they filed plan- An anti-Shell protestor is taken to an ambulance why the aims of the Shell to Sea campaign in- ning objections with to after being assaulted by Gardaí close to clude the renegotiation of Ireland’s terms. the proposed inland refinery at Bellanaboy. Bellanaboy, Co. Mayo in November 2006 Among their many concerns were the pro- HOPE TURNS TO FEAR posed location of this colossal refinery in the In 1996, Enterprise Energy discovered gas in catchment area of Carrowmore Lake, which the Corrib field, 83km off the Mayo coast. By supplies drinking water to 10,000 people; 1999, the company was proposing to bring the and also the fact that the raw gas pipeline Human rights and the policing of Corrib gas ashore near the tiny village of , would pass close to houses and under roads on the shores of Sruwaddacon Estuary, an EU and farmland. Despite numerous and well- Several international human rights organisa- In February 2007, the San Francisco-based Special Area of Conservation (SAC). Local peo- researched objections, the Council granted tions have raised the alarm about how both Global Community Monitor published a report ple initially greeted the news with optimism. planning permission in 2001, but this was Gardaí and Shell’s private security firm IRMS stating: “the behaviour of Gardaí in Mayo is A remote area of northwest Mayo, plagued by appealed and an oral hearing was held by have dealt with protests around the Corrib endangering the safety of people participating emigration and unemployment, might now en- An Bord Pleanála in February 2002. Observ- Gas project. Front Line – the International in non-violent protests as well as consistently joy jobs and lasting infrastructure. ers were surprised by the depth of technical Foundation for the Protection of Human infringing on their civil rights. The report is at: However, the communities in the area of knowledge displayed by local people who tes- Rights Defenders – published a report in www.gcmonitor.org/article.php?id=598 the proposed pipeline and gas refinery soon tified to the hearing.1 2010 by barrister Brian Barrington which was In January 2010, former Garda sergeant became very alarmed when it transpired The board’s senior planning inspector, highly critical of how the protests were being and human rights observer Benny McCabe, that what the company was proposing was a Kevin Moore rejected permission for the re- policed. Among its findings and recommenda- reporting to by justice and peace organisation cost-saving but highly unorthodox method of finery in 2003, concluding: “From a strategic tions were: Afri, said that policing of Corrib had been an bringing the gas ashore. Raw, odourless gas planning perspective this is the wrong site. • There was “an overall pattern of failure [by “anathema to the spirit of community polic- would be pumped at extremely high pres- From the perspective of Government policy Gardaí] to take issues raised by protesters ing”. He said: “Gardaí have been acting with sure from the well head directly to a refinery which seeks to foster regional development, and residents seriously – even when they impunity in north Mayo.” He said this was 9km inland. Gas is normally processed and this is the wrong site; from the perspective have the law on their side,” for example, borne out by the Garda Ombudsman’s state- odourised offshore or at the shore, before of minimising environmental impact, this is where works by Shell were not authorised ment late in 2009 that 75% of complaints reaching residential areas. Residents were the wrong site; and consequently, from the under law. made about policing aspects of the Corrib gas facing the prospect of an “upstream” produc- perspective of sustainable development, this • Pat O’Donnell’s trawler appeared to have project were admitted for investigation. (Irish tion pipeline, carrying raw gas, passing close is the wrong site.”2 been detained by Gardaí unlawfully in order Times, 7th January 2010) to their homes. Upstream pipelines, which Enterprise Energy Ireland had been ac- to remove him from the offshore pipeline In May 2010, Amnesty International and contain a volatile mix of corrosive chemical quired by in 2002, which route. Front Line appointed a full-time human rights compounds, are normally only found under meant the project would now be developed by • The assault on in Shell’s com- monitor for the Corrib gas project. the sea or in uninhabited areas. Local people Shell E&P Ireland. Shell’s appalling safety and pound at in April 2009 should be Campaigners, politicians and advocacy were also concerned that the project was be- environmental record globally and the human reinvestigated by Gardaí based outside Mayo. groups have repeatedly called for an indepen- ing rushed through without any consultation rights abuses that have taken place around its The report is at: www.frontlinedefenders.org/ dent international inquiry into the policing of or dialogue. People were not reassured to projects increased local people’s fears. files/en/corrib_gas_report.pdf the Corrib Gas project.

34 35 Following An Bord Pleanála’s rejection, Shell to seek their release. In north Mayo, resis- ‘Agencies of the State got Opinion polls and executives met with Bertie Ahern, tance escalated, with local people engaging ministers and senior civil servants. Within a in civil disobedience. They blocked the en- involved on the side of the the Corrib Gas week, company executives were granted a trance to the refinery site and prevented any developer, rather than on the meeting with senior Bord Pleanála members, work from taking place there for more than a side of the community. Given project including the chairman. The company was year. A solidarity camp was established on the encouraged to re-apply, which it duly did later pipeline route as a base for supporters visit- that alternative models were in 2003. This time around – with a different ing the area. Rossport Solidarity Camp still available in other countries, Shell and some of its allies have inspector presiding – the board granted plan- plays a vital role in the local campaign. it was scandalous that we sought to portray the campaign against ning permission in October 2004.3 Five years its inland refinery as representing a later, Shell would admit that it specifically SHELL FACES POLITICAL PRESSURE proceeded as we did.’ minority within the local community asked An Bord Pleanála not to assign Kevin As the five Mayo men sat in prison during the Michael D Higgins, speaking in and within Co. Mayo. In reality, every Moore. The board confirmed it had received summer of 2005, public meetings and rallies 2010 about the Corrib Gas project opinion poll conducted in Co. Mayo the request in writing, but stated that its de- were held across Ireland. The growing cam- on the issue has found a majority in cision not to assign Moore to the appeal was paign to release the men brought to national favour of the campaign’s demands that not influenced by Shell’s request.4 attention what was happening in the north- the gas be processed before coming west corner of Mayo: namely, that a powerful violently, baton charging protestors, punch- ashore. The following four polls were RESISTANCE BUILDS multinational company, with the full support ing and kicking them, and throwing them in all conducted throughout Co. Mayo: More and more people in the affected area of the Government, was attempting to force ditches. A particular feature of the policing • TNS-MRBI poll for TG4, September joined the opposition to this experimental in- through an experimental, cost-saving method of these protests was personalised verbal 2006: 61% feel the gas should be land refinery. They wanted Shell to process of bringing gas ashore that would pose a abuse and threats directed by many Gardai processed at sea; 23% felt it should be the gas at a shallow platform off the coast, major threat to the health and safety of the at individuals who were perceived to be taking processed at Bellanaboy. before piping it ashore, as is common prac- receiving community and to the environment. leadership roles in the protest, and at their • Public Opinion Ltd. poll for Mayo tice for gas production around the world. To The Shell to Sea campaign also raised pub- family members. Advertiser, October 2006: 45% want the this end, the campaign name Shell to Sea lic awareness about the fact that Shell and its Supporters from around the country trav- refinery located offshore; 15% support was adopted on 27th January 2005. partners would own 100 per cent of the gas elled to Erris to show solidarity, in response to Shell’s proposal (40% have no opinion). Within the community, many people’s ex- they extracted from this Irish gas field, would calls from the local community. The policing • Red C poll for RTE’s Prime Time periences at the hands of the oil companies pay no royalties to the Irish State and could of protests drew heavy criticism from human and Irish Independent, November and officials were causing them to lose faith sell the gas to Irish consumers at the full mar- rights organisations. In particular, there was 2006: 44% support offshore in the independence of the planning pro- ket rate. concern over the Garda’s “no-arrest” policy, processing; 29% support the cess and in the willingness and ability of the After 94 days in prison, the which was outlined by Supt Joe Gannon in Bellanaboy option; 12% wanted the structures of State to protect them and their were released without making the commit- the Garda Review (November 2006 issue): project abandoned. families. For several months, landowners on ments to facilitate Shell that had been de- “There were no arrests. That was part of our • Red C poll for Western People, the pipeline route obstructed Shell staff from manded of them by the court. The intense strategy: we did not want to facilitate anyone March 2007: 55% support offshore entering their land. In April 2005, the High public protest and political pressure had led down there with a route to martyrdom.” In- processing; 34% support Bellanaboy Court granted Shell an injunction against to Shell applying to the High Court to have the stead of being arrested, people engaging in option; 7% wanted the project these landowners, compelling them to allow injunction rescinded. civil disobedience were physically assaulted abandoned. Shell access to their fields. Four landowners by Gardaí, threatened or intimidated. A report Crucially, in the parish of ignored the injunction: Willie Corduff, Bríd PROTESTS AND POLICE BRUTALITY by the San Francisco-based Global Commu- Kilcommon, where the inland refinery McGarry, Philip McGrath and Brendan Phil- Despite the men’s release, hundreds of local nity Monitor, which visited the area in Febru- and high pressure pipeline are due to bin. In June, Shell asked the High Court to people maintained a constant picket at the ary 2007, found there was “excessive physical be located, opposition has always been take further action. On June 29th, 2005, the refinery site in Bellanaboy. After 15 months, force by gardaí against peaceful protestors very strong. Out of an adult population three men (but not Bríd McGarry) were sent a huge Garda contingent was bussed in and who were prepared to be arrested, which re- of around 1,200 in the parish, 850 to prison, along with two other local residents the blockade was broken by force with many sulted in serious injury.” signed a petition in September 2006 named by Shell, Micheál Ó Seighin and Vin- injuries in October 2006. The protestors con- International support culminated in the opposing the inland refinery. cent McGrath. tinued to mount pickets at the gates of the awarding of the world’s most prestigious envi- The jailing of the “Rossport Five” sparked site, attempting to prevent trucks from enter- ronmental honour, the Goldman Environmen- public outrage and a large national campaign ing and leaving. Gardai dealt with the protests tal Prize, to one of the Rossport Five, Willie

36 37 Corduff, in April 2007. The Irish government rested at sea while lawfully going about his ever, the board said it would provisionally tory work on the tunnel began in 2011 and made no public reference to Corduff’s award. work. After 10 days the Solitaire left Broad- grant permission to Shell if the proposal was is scheduled to take more than two years to haven Bay, citing damage to its crane. Maura altered and it suggested that the company complete. There will be up to 472 truck move- NAVY AND GARDAÍ CLEAR A PATH FOR Harrington ended her hunger strike. tunnel under Sruwaddacon Estuary. Also in ments per day along roads so narrow that two THE PIPELINE In March 2009, was November, the Garda Siochána Ombudsman cars can barely pass each other. In the spring In the summer of 2008, Shell made the first jailed for 28 days for a public order incident Commission (GSOC) reported that policing of of 2012, Gardaí began effectively leaving the of several attempts to lay its offshore pipeline in June 2007. A large group of Gardai had Corrib had been the single greatest cause of policing to IRMS. The company’s civilian staff from the landfall site at Glengad beach to the forced their way onto private land at Pollatho- complaints to the agency. has been acting as a de facto police force, clos- offshore gas field. An army of IRMS security mas Pier to erect a temporary office for Shell, ing roads and illegally detaining protesters. staff closed off sections of the beach. resulting in injuries to 20 local people. MORE CAMPAIGNERS JAILED As the campaign enters its second decade, Members of the Rossport Solidarity Camp In April 2009, Shell again erected the com- In February 2010 Pat O’Donnell was convicted resistance is as strong as ever. Support con- took to sea in kayaks and obstructed the pound at Glengad beach, without planning on minor public order charges relating to pro- tinues to flow in from all over Ireland and in- dredging of the trench for the pipe. When the permission. Local resistance was as deter- tests. He was jailed for seven months. This fol- ternationally. The thousands of inspirational world’s largest pipe-laying vessel, the Solitaire, mined as ever. Willie Corduff climbed under a lowed a series of shorter detentions on minor experiences of the campaign and the links arrived in , escorted by Irish truck and refused to move. During the night, pretexts throughout 2008 and 2009, while forged are too numerous to describe even in navy vessels, fishermen prepared to resist its a group of eight masked men emerged from working at sea. A 2010 report by barrister a much thicker volume than this one. Norwe- work and retired local school principal Maura the Shell compound and viciously assaulted Brian Barrington for human rights organisa- gian trade unionists, veterans of the Bolivian Harrington began a hunger strike. Respected him. Corduff lost consciousness and required tion Front Line found that Mr O’Donnell’s boat ‘gas war’ and ‘water war’, and Nigerian anti- local fisherman Pat O’Donnell was twice ar- hospitalisation. had been detained by Gardaí “unlawfully” and Shell campaigners have all visited Erris. At a public meeting a week later, attended by with “improper motive” to stop him from op- At the time of writing, the future of the Cor- ministers Eamon Ryan and Eamon Ó Cuív, fish- posing Shell’s pipe laying in June 2009.5 rib Gas project was still uncertain. The out- erman Pat O’Donnell voiced fears about what In March 2010, another prominent Shell to come will be hugely significant in terms of the The Corrib Gas field – and IRMS staff might do to him at sea: “These Sea campaigner, Niall Harnett, was similarly precedent it sets for the extraction and pro- Myth future gas discoveries in mercenaries that have been training for the last convicted of minor public order offences and duction of gas and oil from other fields in Ire- Irish territory – will bring down domestic two months in Killala Bay: am I going to meet received a five-and-a-half month jail term. land and for the role of community consent in gas prices. them in balaclavas like Willie Corduff met his such projects. Accordingly, campaigners have attackers?” Six weeks later, O’Donnell’s trawl- THE ‘KILL ZONE’ maintained a long, hard struggle, while the Ireland’s licensing er, the Iona Isle, was boarded by four masked In May 2010, Shell submitted a revised appli- State has used all its powers to force through Reality terms do not stipulate men. They held O’Donnell and his crewman at cation to An Bord Pleanála, involving a tunnel this disastrous project, so that Ireland can any price reductions for Irish consumers. gunpoint and scuttled the boat. The two fisher- under Sruwaddacon Estuary. The company demonstrate to big business that its interests Companies who find oil or gas in Irish men escaped in a life-raft. noted the nearest dwelling was now 234 me- will take precedence over those of the receiv- waters (e.g. Corrib) or in Ireland (e.g frack- The Solitaire’s return in June 2009 was again tres from the pipeline. The previous oral hear- ing community. ing in the North West) can sell it to Bord greeted by intensive direct action by fishermen ing had heard that anyone within a 230-metre Regardless of the outcome, the grassroots Gais at the international market rate. This and kayakers. A 200-strong force of IRMS staff “kill zone” was likely to burn spontaneously resistance to this inland refinery has won means that if the price of gas internation- was backed up by 300 Gardaí, several navy within 30 seconds should a pipeline rupture many victories along the way. A consortium ally were to double in the next 10 years, gunboats and a Garda helicopter. Pat O’Donnell occur. However, Cmdt Patrick Boyle, a retired of companies, with the collusion of the Irish then the price Irish consumers pay for the and his son Jonathan were both arrested at sea, army bomb disposal officer, had testified that State, attempted to foist an experimental gas from Corrib, or other Irish discoveries, their vessels commandeered and held until the all occupied buildings should be at least 500 project on a remote community. The result is would also double. Solitaire had finished its work. metres from the pipeline route. Pollathomas that the project will be delayed by more than Bizarrely, even without an international primary school lies within a 230 metre radius. 10 years. It is now unthinkable that a similar increase, Corrib coming ashore is “very ‘UNACCEPTABLE’ ON SAFETY GROUNDS approach would be taken in future. likely” to lead to an immediate increase In November 2009 An Bord Pleanála rejected RESISTANCE CONTINUES in the price of gas for Irish consumers, the revised route for the onshore pipeline, Following yet another oral hearing in August Footnotes according to the Commission for Energy concluding that more than two-thirds of the 2010, An Bord Pleanála granted Shell per- 1. McCaughan, 2008, p.35 Regulation in a July 2011 report. route was ‘unacceptable’ on safety grounds. mission in January 2011 for its revised on- 2. Centre for Public Inquiry, 2005, p.14 3. Centre for Public Inquiry, 2005, pp.40-42 www.cer.ie Reported in Sunday Business This ruling vindicated the safety concerns of shore pipeline route. This followed lobbying 4. Irish Times, 10 October 2008, ‘Shell asked for named Post, July 10th, 2011 local campaigners, which had been ridiculed from the Department of Energy and Natural inspector not to hear appeal’ for years by Shell and the Government. How- Resources to relax safety criteria. Prepara- 5. Front Line Human Rights Defenders, 2010, p.51

38 39 debate about how the Government manages ‘If you have a windfall like our oil and gas resources on our behalf. The debate needs to include consideration of oil and gas, and it comes how we want to use fossil fuels, in the light of before you are ready to use it their role in causing runaway climate change. prudently, you squander it. ... I A moratorium on exploration licences could be introduced pending this debate. am glad the oil and gas is still The conclusion (on page 25) to the section there. I am glad it is not gone.’ ‘Options for Ireland’ outlines some of the op- The late Justin Keating, former minister tions available. In brief, our licensing system could be over- who introduced the 1975 licensing hauled to give Ireland: terms, interviewed by film-maker • a greater share in the revenue generated Risteard Ó Domhnaill in 2008 from any extraction of our oil and gas; • involvement in development and production of discovered fields, resulting in expertise and censing terms amounts to saying: “the best infrastructure on the part of the State (e.g. a deal we can get is this very bad deal”. If that State energy company); were the case, the sensible course of action • greater control over its resources, which for Ireland would be to leave the resources Where a company does decide to pipe gas would strengthen Ireland’s security of supply. under the ground. In years to come they will Conclusion ashore in Ireland, or where the resource is Since these resources belong to Ireland in be more valuable; finding and extracting them found onshore (such as the Lough Allen Ba- the first place, it would be reasonable for the will be easier, due to technological advances; Ireland’s system of managing its oil and gas sin), the communities affected by such a proj- State to step in and take a share in oil and they will be more scarce globally. resources is dysfunctional; out of step with ect have no involvement in decisions about gas fields once they have been discovered, Work on the Corrib Gas project could be the rest of the world; and heavily skewed in the project. The experience of the Corrib Gas without necessarily having shared in the cost halted pending an independent review of the favour of private companies to the detriment project illustrates the hugely damaging con- of exploration. The size of the State’s share entire project. Any exploitation of the Corrib of Ireland’s public interest. Ireland’s only sequences of this. could be based on a sliding scale dictated by gas field should be done in a safe way that means of extracting revenue from oil or gas Ireland’s tradition of “light” regulation of the size of the field. will not expose the local community to un- – its 25% tax on profits – puts us at the bot- business – which led to the 2008 banking The above changes could be made by over- necessary health, safety and environmental tom of the international league table, while crisis and economic collapse – is also char- hauling our licensing system before any more risks. An independent international inquiry is extraordinarily generous tax write-offs mean acteristic of the State’s interaction with oil licences are issued. Crucially, the Government clearly needed into the policing of protests that the State ‘take’ as a percentage of rev- companies. This is deeply worrying, in light could also revisit licences that have already around Corrib. enue is likely to be far lower: as low as 7% ac- of such incidents as the Deepwater Horizon been issued. Governments around the world Ireland could use increased revenue from cording to figures extrapolated from a report disaster in the Gulf of Mexico in 2010 (involv- have been waking up to the reality that natural its natural resources to fund the transition to commissioned by Shell. ing a rig built by Transocean Ltd, which built resources are sovereign assets and that revis- renewable energy. The Irish Government’s policy – maintain- the Corrib Gas rig.) iting bad deals is entirely within their rights. Ireland possesses valuable mineral resourc- ing these “attractive” terms to encourage ex- Considering the role of fossil fuels in ex- Other countries that have asserted their rights es. Extracting them poses major risks to the ploration and thereby create jobs, investment acerbating climate change, it should be the in this way have not been blacklisted by mul- environment and to affected communities and and a domestic supply of oil and gas – is people of Ireland rather than private corpora- tinational corporations or financial markets contributes to climate change. There are a destined to fail, since the companies are not tions who decide whether and how our hydro- – after furious condemnation of the actions of number of compelling arguments for leaving obliged to supply the Irish market, to land the carbon resources are used. the state, the companies quietly came back these resources in the ground, at least in the resources in Ireland or to use any Irish staff or to the table to negotiate a reduced – but still short term. If the Irish government is to permit services. Not only ownership, but also control WHERE TO FROM HERE? profitable – deal. private corporations to extract these fossil fu- of our resources is transferred in full to pri- This is an information booklet and as such Even if it were true that changing Ireland’s els and sell them on the international market, vate companies, some of whom have stated does not advocate a specific course of action licensing terms – both retrospectively and for it should be able to guarantee significant and their intention to export oil directly from our or a specific set of licensing terms. However, future licences – would scare companies away, tangible benefits for people in Ireland. Under offshore fields. there is clearly an urgent need for an informed using this argument to justify our giveaway li- our current licensing regime, it cannot.

40 41 Bibliography Contact Recommended reading in bold This information booklet was www.shelltosea.com/booklet ‘Breakdown in Trust: A Report on the Corrib ‘Oil and gas royalties: A comparison of researched and compiled by the The tables and map at the centre of the Gas dispute’, Brian Barrington (barrister-at- the share of revenue received from oil and Dublin Shell to Sea campaign law) for Front Line Human Rights Defenders, gas production by the Federal Government booklet are accompanied by an extensive 2010 and other resource owners’, United States Email: [email protected] spreadsheet, containing sources and other Government Accountability Office, 2007 Tel: 086-7362417 information, as well as a larger version of ‘Capital investment decision making and Web: www.dublinshelltosea.com the map, all at the above address. These trends: Implications on petroleum resource ‘Once Upon a Time in the West’, Lorna will be updated on an ongoing basis and development in the U.S. Gulf of Mexico’, Siggins, Transworld Ireland, 2010 National Shell to Sea website: are intended as a resource for researchers, Kaiser, M.J. & Pulsipher, A.G., Mineral Management Service, U.S. Department of ‘Optimising Ireland’s Oil and Gas Resources: www.shelltosea.com campaigners and journalists. the Interior, 2006 Report of the SIPTU OIl & Gas Review Group’, SIPTU, 2011 ‘Changing fiscal landscape’, Daniel Johnston, 2008, Journal of World Energy Law and ‘Our Story: The Rossport 5’, Mark Garavan Business, 1(1) (Ed), Small World Media, 2006 Links/resources ‘Expert Advice on Review of Irish Petroleum ‘Report of an International Fact-Finding Del- E&P Licensing Terms’, Indecon, 2007 egation to Co. Mayo, Ireland, February 23- Department of Communications, Energy and Corrib Gas pipeline (available at: www.dcenr.gov.ie) 27, 2007’ Global Community Monitor, 2007 Natural Resources (DCENR) Site maintained by Shell E&P Ireland (www.gcmonitor.org) www.dcenr.ie http://www.corribgaspipeline.ie/ ‘FACTS: the Norwegian Petroleum Sector 2010’, Ministry of Petroleum and Energy & ‘The Corporate Takeover of Ireland’, Kieran Petroleum Affairs Division (of DCENR): Royal Dutch Shell the Norwegian Petroleum Directorate, 2010 Allen, Irish Academic Press, 2007 www.pad.ie A site that scrutinises the operations of Shell’s global operations ‘Fiscal terms comparison: A study for ‘The Great ’ (report), Shell to Sea campaign http://royaldutchshellplc.com Petroleum Affairs Division, DCMNR’, David Centre for Public Inquiry, 2005 www.shelltosea.com Fox, 2003 Norwegian Petroleum Directorate (NPD) ‘The Great Gas Giveaway: How the elites Dublin Shell to Sea campaign (English language version of website); ex- ‘Global oil and gas tax guide 2009’, Ernst & have gambled with our health and wealth’ www.dublinshelltosea.com cellent facts and figures about how Norway Young, 2009 (briefing document), Michael McCaughan & manages its oil and gas: Andy Storey, Afri, 2009 ColmRapple.com http://www.npd.no/en/ ‘Licences, concessions, production sharing Website of economist Colm Rapple; includes agreements and service contracts’, Easo, J, ‘The Norwegian Oil Experience: A toolbox for an archive of his articles about ‘The great oil Indymedia Ireland 2009, in G. Picton-Turbervill (Ed), Oil and managing resources?’, Helge Ryggvik, Centre and gas giveaway’ Non-corporate media coverage of issues gas: A practical handbook, Globe Law and for Technology, Innovation and Culture, http://colmrapple.com/ such as Corrib Gas Business University of Oslo, 2010 (available from: www.indymedia.ie http://www.irishleftreview.org/2011/04/12/ Irish Oil and Gas ‘Offshore Oil and Gas Exploration’, norwegian-oil-experience-toolbox-managing- Information and analysis Fracking information: Report by (Oireachtas) Joint Committee on resources/) www.irishoilandgas.com frackingfreeireland.org Communications, Natural Resources and goodenergiesalliance.com Agriculture, May 2012 ‘The Price of our Souls: Gas, Shell and Rossport Solidarity Camp nofrackingireland.wordpress.com (www.oireachtas.ie) Ireland’, Michael McCaughan, Afri, 2008 www.rossportsolidaritycamp.org frackingresearch.org

42 43 Debate about Ireland’s oil and gas resources and how the Government should manage them is poorly informed and is hampered by wildly differing claims. This has led to confusion, not just among the public, but also politicians and journalists.

This booklet seeks to provide an informative guide to these issues: • What is the extent of exploration in Ireland’s offshore and how much oil and gas is estimated to be under Irish territory? • Is it true that Ireland’s licensing terms represent a ‘giveaway’? • How did our unusual terms come about? • What financial benefit, if any, will Ireland enjoy from exploitation of these resources? • How do Ireland’s terms compare to those in other oil/ gas-producing countries? • Will the production of new oil and gas fields improve Ireland’s ‘security of supply’? • What models in other countries could Ireland learn from and can Ireland re-draft its legislation covering this area? • In light of the link between the burning of fossil fuels and runaway climate change, does our current legislation give Ireland any control over the rate at which its oil and gas is extracted and consumed?

Published by Dublin Shell to Sea www.dublinshelltosea.com €2

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