| 17.3°C Dublin

Big oil, small village... was it worth it?

Close

LIFE’S A GAS: Reporter Sarah McCabe at the Corrib site. Photo: Keith Heneghan

LIFE’S A GAS: Reporter Sarah McCabe at the Corrib site. Photo: Keith Heneghan

LIFE’S A GAS: Reporter Sarah McCabe at the Corrib site. Photo: Keith Heneghan

Belmullet could be any rural Irish village.

Located on a narrow peninsula on the north-west Mayo coast and reachable by just one snaking, potholed road, it takes four long hours to drive there, pedal to the metal, from Dublin.

It is a beautiful place, windswept and weatherbeaten, covered in vast swathes of golden and purple heather. Sparsely populated, its residents total just 1,000 people. The vast Gaeltacht region of Erris in which its situated has just 10,000. The people here are welcoming and traditional, and still define each other by their parish.

Hundreds of Irish towns and villages fit that same description. But something makes Belmullet different to the rest.

It is bustling. The well-kept town centre is so busy that it is hard to find parking on a Monday afternoon. Its pubs and hotels buzz with customers. There is no evidence of the recession that decimated most of rural Ireland's high streets.

The reason for this is natural gas, and Shell.

The Corrib gas field is Ireland's second ever commercially viable gas find, following the discovery of the Kinsale Head gas field in 1971.

It was first discovered in 1996, 80km off the coast of Erris Head in an area licensed by UK oil and gas explorer Enterprise Oil. It contains an estimated 1 trillion cubic feet of gas. Shell gained the right to develop Corrib when it bought Enterprise in 2002.

Serious work on the field began in 2004 when the company lodged a planning application for a gas processing terminal at Ballinaboy, a 10-minute drive from Belmullet village centre. Unlike Kinsale, where gas is processed offshore, Corrib's gas is being brought to land via a tunnel and pipeline before processing.

Then all hell broke loose.

Most of us are familiar with the story. There were mounting safety and environmental concerns and dissatisfaction over the proposed route of the pipeline and location of the terminal. Shell to Sea, one of the most vocal protest groups the country has ever seen, came to national attention. Five protesters were jailed for 80 days; others went on hunger strike. A series of planning challenges brought construction virtually to a halt.

These and other problems have delayed the project by around eight years. This has helped push its total cost to around €3.5bn, more than four times as much as Shell originally estimated.

But now, finally, it is nearly there. The majority of the pipeline and processing terminal is completed. Gas is expected to start pumping early next year. For Shell, that means a relatively happy ending for one of the darker chapters in its corporate history.

For Belmullet, it is not necessarily a good thing.

The vast majority of the jobs that the development of Corrib created - around 1,000 sustained over a decade, and 1,400 at peak - were involved in construction. Once this finishes, worker numbers will drop back to the 175 people who will be needed to run the gas terminal over the 15-20-year life span of the field.

This fall off in employment does not only have consequences for the people who will immediately lose their jobs.

It will also have implications for the hundreds of businesses in the region that have been sustained, for 10 years, by Shell and its workers. This ranges from civil engineering firms whose annual revenue runs into the hundreds of millions, to Belmullet's two hotels, to its shops, restaurants, bank, post office and hardware stores.

County Mayo's most famous resident also made the trip to Belmullet this week. The Taoiseach was in town to launch Erris Enterprise Week and announce a new high-speed broadband line for Mayo and Galway, part-funded by Shell, which will be wired through the Corrib pipeline. After a Full Irish with local business owners, Mr Kenny addressed the audience from a stage plastered with Shell insignia. Very few private companies get that opportunity.

The Taoiseach is optimistic about the future for the people who have built the Corrib development.

"A lot of young Irish people have gained enormous expertise and confidence as a result of being given responsibility for very sensitive issues, be they environmental or whatever, in the development of the Corrib project," he said.

Fianna Fail's Dara Calleary, Mayo's sole non-Fine Gael TD, was less optimistic. "The end of construction on the pipeline, which has provided most of the jobs, is a major concern for me. We need to start planning now. There is an exceptionally good skill set here - now we need to start marketing it."

Belmullet's businesses are all too aware of it, too. Orla Talbot, owner of the 21-room Talbot hotel, described it as "a fear of the unknown."

"But we are optimistic. Thousands of people have come to Belmullet as a result of it who otherwise would have never come near us. Guys that came here for a year to work on the site have built holiday and retirement homes here. It has put this area on the map as a tourist destination. And there will be people coming and going for years as they service the terminal."

Shell Ireland is headed up by an affable Canadian in his 50s, Michael Crothers. He has spent nearly three decades at Shell and managed far larger projects before Corrib, responsible for 30 or 40 countries at a time. The fact that someone so senior was parachuted into the Irish job in 2011 says much about how problematic it has been for Shell.

The company's experience in Erris has been "very challenging" Mr Crothers said in a wide-ranging interview.

"If you look at the situation we largely created for ourselves at the beginning when we first came in to work in Erris, we just didn't spend enough time understanding the sentiment on the ground and the concerns of the community."

The company ploughed millions into improving its reputation and relationship with the people of Erris post-2007, after things started to go badly wrong. As well as hiring locally and gifting grants to local businesses and causes, it has spent €19m on roads in the area.

"Through a lot of honest conversation I think we have really progressed a long way to the point where the community has tolerated and accepted to a large degree the project. We can't say we have the full support of the community; there are still some people who have strongly held views that don't accept it. But if you look at the broad sentiment and the support that we are getting from a wide spectrum of Erris, we have come a long way," said Mr Crothers.

The reduction in job numbers when construction on Corrib finishes will be gradual, he added, and routine maintenance will create jumps in employment in future.

But the question about what will happen to the hundreds about to lose their jobs when construction finishes remains. So does the debate about how Ireland handles its fossil fuels, about the sanity of allowing industry into one of the country's most spectacular beauty spots and about whether short-term economic gain justifies projects like Corrib.

"Jobs at any cost is not good enough," said Shell to Sea spokesperson and local woman Maura Harrington.

"Where do we draw the line - about 40 years ago someone tried to get a nuclear power plant built here, citing emigration. And it hasn't even been the answer to unemployment. Erris remains bedevilled by emigration."

Shell's Corrib project will escape the Government's recent changes to the taxes imposed on oil and gas companies profiting from Irish hydrocarbons, since its licence was awarded before the changes. The main levy it faces is a corporation tax rate of 25pc on any profit. This is double the current national rate for other businesses, Mr Crothers pointed out.

Others feel differently. "Before declaring profits, the company can write of 100pc of costs against this tax, including the cost of previous, unsuccessful wells drilled anywhere in Irish waters," said Shell to Sea.

The very fact that Government changed the old terms suggests that it too felt they were overly beneficial for mining companies.

When discussing the taxes Ireland charges for petroleum, government and mining companies definitely agree on one thing: Ireland does not have much of the stuff in the first place. We cannot impose the same lucrative taxes as countries like oil-rich Norway, they argue, when there is a much higher risk and far less chance of success when exploring Irish waters.

It is that poor success rate, not the negative experience that Shell has had with protesters or regulators in Corrib, that will deter other mining companies from Ireland, Mr Crothers said.

"Is there some concern about the time it has taken Corrib to progress? About some of the complexity in the regulations - which is being worked through, but it's still fairly complex compared to other jurisdictions? Yes.

"But I think the underlying decision is about the risk and whether you are going to find something. One well offshore will cost about €150m. So it's a big gamble. If you have that option versus maybe working in the North Sea, where there is very well known geology, very understood long-term business over 50 years, companies are loathe to take that risk."

Aidan Heavey, the Offaly-born chief executive of Tullow Oil, is less reticent. "We have not covered ourselves in glory with Corrib," Mr Heavey, one of the country's best-paid CEOs, told me earlier this year.

He refers to delays to Corrib as "years of lost tax revenues for the State."

"Multinationals have found it very difficult to work in the west of Ireland," said Mr Heavey.

That debate ended long ago for Belmullet. There were no protesters during Enda Kenny's visit, though Shell to Sea's Maura Harrington said their campaign is far from over. Life has mostly returned to normal

"It hasn't taken over Belmullet" Orla Talbot said.

"Maybe it did for a few years, but that has settled down. Tourists visit now and don't know Shell is here."

Sunday Indo Business