Shale oil and gas must play a part in recovery
Oisin Fanning of San Leon Energy provides a reality check for those who oppose the exploitation of Irish oil and gas resources
'The 1.8 per cent of voters who voted Green in 2011 often hold the rest of the country hostage through their influence on the media. We need to understand that oil and gas belong to everyone in Ireland...'
THE story of oil and gas exploration both onshore and offshore in Ireland has often been one of dashed hopes. But recent hi-tech advancements in exploration techniques show that oil and gas is most likely abundant and ubiquitous worldwide. And, despite Irish greens' "Stop the planet, I want to get off" narrative, the world does include Ireland.
The issue of energy in Ireland and elsewhere in Europe needs a little bit more reality and a lot less magical thinking.
We can all agree that CO2 is a global issue that needs to be dealt with. But the only part of the world actually reducing CO2 production is the United States, as huge new supplies of natural gas perform a trick only recently thought impossible: economic growth and lower CO2.
Let's start discussing Ireland, based on some facts.
The Republic used 130,000 barrels of oil per day last year, which works out at roughly €3.6bn a year. In natural gas, we imported 4.2 billion cubic metres at a cost of at least €1bn. (I don't need to tell this to most readers, but I have to provide a reality check for those opposing oil and gas.)
The balance of payments is a key metric. The surplus is very important to the economy's very large foreign debts. These cannot be paid down unless a surplus is being run on the balance of payments. A surplus makes the paying down of debts owed to foreigners, and thus the government's rate of interest, that much easier.
So if we could make Ireland energy independent, we'd reduce the current account balance by over 7 per cent.
To provide another perspective, the €4.6bn that is spent on energy takes out of the economy only slightly less than the tourism industry puts into it. So energy independence would have the same effect as doubling tourist revenues.
The key point we need to understand is how importing energy is exporting money. Even more significant is that the oil and gas underneath Ireland and the surrounding seas could provide an even better boost to the economy. Ireland has one of the lower royalty rates of gas and oil at 25 per cent, but even that would mean over €1bn a year to the Minister of Finance. The actual benefits would be even greater as the oil and gas sector would see international investment flowing and job creation. Job creation means lower social spending and people paying taxes to lower the deficit even further.
So what's stopping Ireland?
It's still early stages, but it appears that Ireland has both offshore oil and gas and onshore shale gas that provide a good news story for both the economy and the environment. The Barryroe field should start producing in 2015/16 and has recoverable oil equal to almost seven years of imports. Let's not forget that the Porcupine Basin off the Southwest and the Irish Sea in the Dalkey Basin are equally prospective.
Barryroe would also be able to produce significant quantities of gas, yet in natural gas, excitement also surrounds Tamboran's proposals in Cavan, Leitrim and Fermanagh. Tamboran says that it has enough gas for 40 years of energy security and will need investment of €7bn and create 600 jobs in the Republic with slightly more security, investment and jobs being created in Northern Ireland.
But as they say in the TV show, we don't want to give you that. Using natural gas to replace the coal still used in 20 per cent of the generation mix would cut another several hundred million off the balance of payments spent on importing coal and reduce both air pollution and CO2 production since gas is 50 per cent cleaner than coal and 30 per cent cleaner than oil.
But the unrealistic and unscientific green opponents don't want to give you that either. Using a combination of junk science gleaned from YouTube videos, an unrealistic idea of how advanced renewable technology is and the mad idea that we can simply stop using a third of energy overnight, they try to convince the 98.2 per cent of the electorate who didn't vote for them in the 2011 election that we should leave carbon fuels in the ground.
Importing energy into Ireland is no different from exporting money. Yet a handful of protesters have a history of impoverishing Ireland even further through a naive and unrealistic, almost religious belief in a bright green world. They believe in both catastrophic climate change and magical solutions.
Again, climate change is something the rest of the planet must deal with, but five million Irish won't make any difference to world CO2 levels. The surging production of gas in North America is cutting CO2 as it reduces coal use, and we can hope the initial estimates of even more shale gas in China will mean the world climate crisis can be solved by an eventual substitution of gas for coal in China.
Simply replacing only a quarter of Chinese coal with gas, for example, would be the same as causing all European CO2 from coal and gas generation to disappear.
But the 1.8 per cent of voters who voted Green in 2011 often hold the rest of the country hostage through their influence on the media. We need to understand that oil and gas belong to everyone in Ireland: Dublin, Belfast, Waterford and the rest of us. We need to start a national conversation over national resources we hold in common.
It's simply unfair for mis-informed scaremongers in Leitrim and Cavan to decide the outcome of everyone else's economic future. No one is proposing to industrialise the landscape. Shale gas will certainly have a lower footprint than the thousands of windmills proposed to export electricity to the UK for example.
The stories of water pollution are simply that: stories. There has been not one single case of proven pollution out of hundreds of thousands of shale wells in the US. The famous American lawyers would have picked up on that – but they haven't because they need proof.
The impact on the green and pleasant land will be far less than some fear it will be, with only a handful of drill sites going at once, rarely within sight of each other.
The good burgers of Bremen or the Meinheers of Maastricht will continue to come to Ireland for their holidays – but all winter long, the hotels and B&Bs could also be full with gas industry workers from Calgary and Houston. Many tourists come to Ireland because they don't have a hope of selling their summer home. They could be very happy to rent them to oil and gas workers all year.
The alternative for the unemployed of Ireland will be that the airports will be still be full – of emigrants. When a nurse leaves Dublin, she'll be gone because the Government has run out of money for her job. We have to ask why Enda Kenny is brave enough to close hospitals but not brave enough to stand up to a tiny majority of activists who disrupt on- and offshore oil and gas as they did the Corrib before them.
Energy has been a boring industry for years. Too many people think electricity comes out of the wall, but a lot of smart people think about it all the time so consumers never need to. The recent advances in 3D seismic exploration, horizontal drilling and hydraulic fracturing have unleashed a wave of energy innovation in Barryroe and Leitrim alike.
The income generated from those resources could be felt in every corner of Ireland. It would also be felt in the pockets of the bankers when they won't have the excuse to squeeze more interest out of the Irish stone.
But this will only happen if we start looking at the riches held in the rocks of Ireland. Our rocks hold our future.
Oisin Fanning is executive chairman of San Leon Energy