Debate about oil resources should begin with the facts
Ireland is a high-cost, high-risk destination for the oil industry
Ireland is a high-cost, high-risk destination for the oil industry. This deters companies from coming here. Only 6 per cent of the total area offered in the last licensing round, in 2011, was taken up. None of those that bid were household names. Overall, the industry’s big players are poorly represented here.
Only 3 per cent of the State’s offshore area is under licence, according to the Irish Offshore Operators’ Association (IOOA), which also notes that just 130 exploration wells have been drilled there over the last 50 years, compared to 1,000 in Norway and 2,000 in the UK. This creates a vicious circle: the less you drill, the less likely you are to find something, the less attractive your territory becomes for exploration, and so on.
The IOOA’s chairman, Fergus Cahill, last week argued that more exploration could lead to more discoveries and an improved strike rate. Assuming this is so, and the Government’s estimates of what is lying beneath the seabed are true, then we need more exploration.
There are really two steps to this. The first is working out how to encourage that exploration. Unlike Norway, we can’t afford to underwrite exploration. However, the Government is jointly funding a €15 million survey with Italian oil giant Eni of the Republic’s undersea geology. Its results will be made available to the industry. They should mitigate some of the up-front costs by giving companies a focus for more detailed work.
The next step is deciding clearly what we want if there are large commercial quantities of oil out there.
Industry’s right to profit
Within that, we need to balance our right to a decent return from these resources with the industry’s right to profit from them, and work out how else we can maximise the wealth that they could potentially create.
So the Government needs to decide if it wants to charge tax, rent and/or royalties, at what rate, or participate directly.
When Norway’s first commercial field was discovered in 1969, its government drew up “10 commandments” to govern how its oil would be exploited. They required that the oil be landed there and an industry developed alongside it.
Such a rule would deliver obvious benefits here, but it would need infrastructure such as refineries and so on. The battle sparked by the Corrib field’s development, and the planning law failure highlighted by the judicial review of the foreshore licence granted to Providence for exploration off Dalkey, gives an idea of the challenges that this would involve.
These issues need to be weighed up in any debate. We should have that debate now, but it needs to start with the facts, not with emotive arguments about poor oppressed Ireland giving away her petroleum wealth for a song.
Barry O’Halloran is a journalist with
The Irish Times