Cabinet to discuss plan to store gas in Kinsale

The Cabinet will discuss tomorrow a proposal to store reserve gas supplies in the Kinsale field, it is understood.

The plan to stockpile gas in 2002 has been proposed by the developer of the field off the Co Cork coast, Marathon Petroleum.

This is seen as an alternative to Bord Gais's plan to construct a £300 million (€380 million) interconnector, parallel to its existing link with Scotland.

Some Government members are said to be concerned about the expenditure required for the Bord Gais plan, which has already come before Cabinet on two occasions in recent weeks.

In addition, it is perceived that the interconnector would enhance Bord Gais's competitive position in a liberalising market.

The Department of Public Enterprise has argued the Bord Gais plan should be sanctioned because projections by the Economic & Social Research Institute suggest supplies available in winter 2002 will not meet demand.

In the Marathon plan, additional gas imported from Scotland during periods of low demand would be stored at Kinsale, which is nearing the end of its productive life. When demand rises during winter 2002, that gas would be pumped into the national network.

If the plan was sanctioned, one informed source said the Government could postpone its decision on the Bord Gais interconnector for a year.

At that stage a timetable for the delivery of gas from the Corrib field would be clearer.

Supplies from that field will not become available until the second half of 2003, according to the project developer, Enterprise Oil. This means Corrib gas will not be available to meet the projected shortage in 2002.

Its spokesman yesterday rejected a claim that the planning process for a gas reception plant in Co Mayo would delay its supply until July 2004.

"We have written to both the Departments of the Marine and Public Enterprise confirming that gas from the Corrib field will be available in 2003," he said.

Besides constructing the second Bord Gais interconnector, the only other means of avoiding a break-down in the system in 2002 would be to cut supplies to certain customers.

It is thought the Government would be unwilling to contemplate that, because it would compromise contracts and send negative signals to investors within and outside the State.

An Anglo-American consortium, Premier Transmission, has proposed a Belfast-Dublin pipeline built according to customer specifications.

It has so far failed to secure firm contracts with customers and blamed this on uncertainty surrounding a public service obligation fee to guarantee uniform tariffs throughout the State.

However, such a plan is seen as providing a tangible means of cross-Border co-operation. Bord Gais too has proposed exporting gas from the Republic to Northern Ireland.