Ireland Orders Investigation into Shale Gas Fracking
The possibility of successful shale gas reserves in Ireland has been met with mixed reactions in the country. However, for a country struggling with severe debt and recession, the prospect of billions of euro worth of gas reserves is an undeniably attractive prospect.
While still in the very early stages, successful shale gas excavation looks to be a strong possibility in Ireland in the future. To date, three companies have been granted onshore petroleum licensing options from the government, which allows for “shallow geological sampling”. These are Tamboran Resources, Lough Allen Natural Gas Company and Enegi Oil Plc. The licences, granted by the governmental Department of Communications, Energy and Natural Resources (DCENR), are the first step in a three-step process.
Tamboran Resources and Lough Allen Natural Gas Company were the first to receive licences, in Februrary 2011. The licences enable both to begin exploration of the Lough Allen Basin (less commonly known as the Northwest Carboniferous Basin). The licence covers a 1,630 square kilometres area of the Lough Allen Basin and five of the 32 counties on the island of Ireland: Leitrim, Roscommon, Sligo, Cavan, Donegal and Fermanagh.
However, CEO of Tamboran Resources, Richard Moorman, says that Tamboran will only drill in three of those counties: Leitrim, Fermanagh and Cavan. Of the three, Mr. Moorman expects that Leitrim will be the most viable county for gas and says he is quite confident that the Lough Allen Basin will yield shale gas. He estimates that there is a seventy-five per cent chance of success in the region. “We have a good feeling about this,” he said.
Richard Moorman may have good reason to be confident. IndigoPool, a subsidiary company of oilfield services provider Schlumberger, estimates the value of the gas in two of the three reservoirs in the basin at 9.4 trillion cubic feet of gas, equating to about 1.5 billion barrels of oil. The value of the gas, at current oil prices, could exceed €120 billion.
Mr. Moorman says that Tamboran Resources would aim to extract at least ten per cent of the gas. “We expect to drill hundreds of wells over 15 years,” he said.
Enegi Oil Plc. received the third licence to explore shale gas reservoirs in April 2011. This licence applies to a second basin, the Clare Basin, an area that comprises 495 square metres and four counties. These are counties Clare, Cork, Kerry and Limerick. Enegi, too, seem confident of success in the area.
“Enegi has adopted a strategy of reducing risk concentration,” chief executive of Enegi, Alan Minty said. “The award of this option demonstrates the commitment of the company to build a portfolio of assets where real value can be created whilst minimising the financial risk of the company.”
Enegi say that well log analysis suggests that hot shale gas may be present in the Clare Basin. They will be spending £500,000 (Sterling) over the course of the next two years to investigate the potential further.
The onshore petroleum licensing option is the first step that all three companies must take, according to Irish regulation. This step serves as an information-gathering process, during which companies research the viability of shale gas reservoirs through shallow geographical processes. At this stage, hydraulic fracturing or “fracking”, the process of fracturing rocks through injections of water, chemicals, sand and salt to release gas or oil, is prohibited. Companies are not required to conduct Environmental Impact Assessments (EIAs) or to obtain planning permission at this initial stage.
The second stage of the process, which all three companies can apply for once the initial step is completed, necessitates applying for an exploration licence. During this stage, companies may drill and perform “test” fracking, to assess the viability of the reservoirs.
However, the lack of regulation at this stage has been cause for concern for many, particularly the country’s oldest and largest environmental trust, An Taisce. The trust has called on the government to fast track regulation before the three initial licence options, lasting two years, run out. The second stage of the process requires an EIA, but whether it requires planning permission is so far unclear and unregulated for.
An Taisce have also called for the third phase of the process, the licence to frack for exploration and exploitation of shale gas, to be prohibited pending an investigation into the environmental impact of fracking.
The call for greater regulation has found support from a number of protestors who have organised grassroots resistance to fracking. Protests groups have been started in several of the counties in both basins and petitions have been started to ask the government to ban fracking in any shape or form.
However, Tamboran CEO Richard Moorman says that Tamboran will not be using chemicals during the fracking process, only sand and water. While he acknowledges that this would be the first time a company had done so, he says that using “zero chemicals” will not provide an issue. “I intend to be the one who shows that it is no big deal,” he said.
Minister for Communications, Energy and Natural Resources Pat Rabbitte has conceded that there needs to be a full investigation into the dangers of fracking. On 5 October 2011, Minister Rabbitte ordered the Environmental Protection Agency (EPA) to conduct a review of the effects fracking could have on the environment.
“At present there is currently very little European experience of the process. For this reason I have asked the EPA to examine the area and advise me and colleagues in Government on the environmental implications of fracking,” he said..
“What is clear is that there is no immediate cause for concern. It is worth noting that the Department has not received applications for, nor licensed the use hydraulic fracturing in the Irish onshore at this time.”
A spokesperson for the DCENR also said that, despite Ireland’s objection to a paragraph relating to shale gas exploration being included in the wording of an EU energy summit in January 2011, the government is not opposed to shale gas exploration currently.
“Ireland supported a call at GAC, for the deletion of the paragraph on the basis that energy mix is a matter for individual Member States, a long standing cornerstone/principle of EU energy policy,” the spokesperson said. “This was purely a procedural matter. Ireland did not stand in the way of the wording eventually going forward to the Council.”
The Department’s concern, the spokesperson said, was cheap energy for the Irish public at no environmental cost.
“The key objectives of Irish energy policy are ensuring that energy supplies are available to consumers at a minimum cost, delivering a secure supply of energy and meeting environmental targets.”
Besides the environmental impact, the financial cost of both that gas line and the potential shale gas excavation has caused consternation. Currently, Ireland has one of the most attractive tax rates for companies in the world. Companies in Ireland are, in most cases, required to pay only 25 per cent corporation tax, a much lower rate than most other countries with possible shale gas reserves; Ireland also does not require companies to pay any royalties to the government on saleable gas. Tamboran, Lough Allen Natural Gas and Enegi may be required to pay between five and fifteen per cent over this rate, but, even at a higher rate, the gain for the government will be lower than for most other countries in comparable situations. Pundits and protestors alike say that the government is effectively giving away a valuable resource, owned by the Irish people, to outside companies, for very little in return.
Successful shale gas excavation in Ireland looks to be a promising and distinct possibility; however, the political, social and environmental issues surrounding shale gas, may prove more challenging than the excavation itself.
By Erica Mills