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Minister Sean Kyne Speech for 2017 Atlantic Ireland Conference

 

Minister of State for

Natural Resources and Digital Development

Seán Kyne TD

 

Speech for 2017 Atlantic Ireland Conference

Clayton Hotel, Burlington Road

9.00, Tuesday, 31st October 2017

 

 

 

Opening Remarks

Ladies and gentlemen it is my pleasure to open this, the ninth annual Atlantic Ireland Conference and Exhibition.

 

The Conference and Exhibition remains a keynote event in the Irish oil and gas exploration and development sector's calendar, providing an invaluable forum for industry, government organisations, the research community, non-governmental organisations, contractors, consultants, students, and indeed interested citizens, to come together and discuss the latest exploration and development opportunities and research results.

 

 

The Conference involves a broad range of presentations and perspectives, including Government Initiatives, Regional Perspectives, Research and Innovation, Prospects, New Thinking on Conjugate Margins; and New Data and Technologies.

 

In addition the exhibition and poster area, which I had an opportunity to view this morning, provides an opportunity for industry, researchers and government to network and share information and ideas.

 

It is very positive to see so many here this morning. I understand from the organisers that this year's conference registration is expected to have exceeded 450.

 

In welcoming all participants I would like to extend a special welcome to those of you who have travelled from overseas. I hope that your stay in Ireland is both fruitful and enjoyable.

 

This morning I propose to share with you my thoughts on the following topics:

  • Government strategy and policy in respect of oil and gas exploration and production;
  • Developments since Atlantic Ireland 2016; and
  • Research initiatives.

 

 

Government strategy and policy

 

Energy is indispensable to the functioning of our society and economy. In common with all developed economies Ireland's energy policy seeks to balance the competing aspects of competitiveness, security of supply and sustainability.

 

The sustainability aspect has come increasingly into focus in recent years with the urgent need to respond effectively to the challenge of climate change.

 

The December 2015 Paris Agreement sets the international agenda for addressing this challenge. However, it must also be addressed at national and sub-national levels and by cities, businesses and communities.

 

The challenges of climate change are not simple ones and there is no single quick-fix solution.

The actions necessary will not take place over night. This is an inter-generational project spanning the next few decades.

 

In broad terms we need to focus both on reducing our overall use of energy through energy efficiency, and by increasing the use of renewable sources of energy.

 

The Government is committed to the transformation required to achieve a low carbon and climate resilient future.

 

July of this year saw the publication of Ireland's first National Mitigation Plan which sets out the context for our climate change objective, clarifies the level of greenhouse gas mitigation ambition Ireland needs, and establishes the process by which we will pursue and achieve our decarbonisation goals.

 

Complementing the National Mitigation Plan, the Energy White Paper "Ireland's Transition to a Low Carbon Energy Future 2015-2030" sets out a vision and framework to guide Irish energy policy and the actions that Government intends to take in the energy sector from now up to 2030, aimed at transforming Ireland's fossil-fuel based energy sector to a low carbon system by 2050.

 

Ireland's transition to a low carbon energy future will involve progressively moving to lower emissions fuels, for example moving initially from peat and coal to natural gas, and ultimately towards an even greater reliance on renewable energy. In that regard, the Government has introduced a range of policy measures and schemes to incentivise the use of renewable energy and deliver energy efficiency. In 2015 over 25% of Ireland's electricity was generated from renewable energy sources.

 

Oil and natural gas will however remain significant elements of Ireland's energy supply in the transition period. Indeed the International Energy Agency forecasts that oil and natural gas will still remain significant elements of the world's energy supply out to 2035.

 

The world depends on a relatively small number of petroleum provinces, many located in areas of political instability, for its oil and natural gas supplies.

 

Even with demand destruction efforts, technological learning, and the developments in shale gas and tight oil output in North America, gradual depletion of the most accessible conventional oil and gas reserves requires the finding and development of new fields.

 

Ireland currently sources all of its oil from abroad and sources its gas supply from the Kinsale fields, the Corrib field and the gas pipelines from Moffat in Scotland. Corrib and Kinsale are not in a position to meet all of Ireland's annual gas demand and so Ireland will continue to rely on gas via Great Britain for the foreseeable future. It is anticipated that the Kinsale fields will cease production in the early 2020's while Corrib production is projected to decrease to 50 per cent of its initial levels by 2025.

 

In that context the Government recognises that the realisation of Ireland's offshore oil and gas resource potential can deliver significant benefits to the people of Ireland in terms of security of supply, import substitution and fiscal return.

 

Early exploration efforts viewed the petroleum geology of the Irish offshore as being comparable to that of the North Sea. Lack of success from drilling efforts in the 1970s and 1980s led to a decline in interest.

 

However industry perspectives as to the potential of the Irish offshore have been transformed in recent years. While the North Sea comparison retains potential, new possibilities have emerged. 

 

Successful exploration off the Atlantic coasts of Africa, South America and Canada has stimulated new interest in the potential of the Irish Atlantic Margin, with new data, analysis and targets. Exploration interest has been drawn to the potential for Ireland to replicate the oil and gas success of Newfoundland-Labrador.

 

Ireland faces competition for exploration investment from established and proven oil and gas provinces and from emerging provinces with similar exploration profiles. Typically, each year, over 20 countries will offer licensing opportunities in their offshore waters.

 

Government efforts in this area have focussed on three clear actions.

 

  • First - to deepen knowledge of Ireland's oil and gas potential, in particular through data acquisition and supporting key research projects;

 

  • Second - to make sure that the regulatory regime is fit for purpose; and

 

  • Third - to offer attractive and innovative licensing opportunities, and to then promote the opportunity.

 

 

In that context that Government has:

·         Initiated and supported data acquisition projects such as the 2D Atlantic Margin Regional Seismic Survey Project; and is actively supporting research mechanisms and projects such as PIP, NAPSA, iCRAG and ObSERVE;

·         Re-worked and modernised Ireland's regulatory and fiscal frameworks, in particular with the Petroleum Exploration and Extraction Safety Acts 2010 and 2015 and the Finance Act 2015;

·         Provided cost-effective entry licensing mechanisms such as the Licensing Options offered under the 2015 Atlantic Margin Licensing Round;

·         Actively promoted Ireland as an exploration investment destination in Europe, North America and most recently Asia and Australia.

 

Developments since Atlantic Ireland 2016

There have been a number of significant developments since last year's Conference. We have seen:

  • Progress on work programmes, particularly in the Atlantic Margin;
  • Implementation of the Financial Responsibility Assessment requirements of the Offshore Safety Directive;
  • The prohibition of onshore fracking; and
  • the evolving BRexit negotiations.

 

Progress on work programmes

2017 has seen significant levels of activity in the Atlantic Margin, and in particular the Porcupine Basin, with over 10,000 square kilometres of 3D seismic acquired and 1,500 kilometres of 2D seismic acquired. We have also seen the drilling of Exploration Well 53/6-1 on the Druid and Drombeg prospects in the Southern Porcupine Basin by Providence Resources and licence partners. Clare Morgan, Head of PAD Technical will address these developments in more detail in her presentation.

 

Much of this activity, allied with the significant level of seismic acquisition undertaken in 2016, is evidence, if any were needed, of companies actively pursuing their work programme commitments on the 28 Licensing Options awarded under the 2015 Atlantic Margin Licensing Round.

 

The term of the majority of these Licensing Options will conclude between end February and end June of next year. Some have already progressed to full Frontier Exploration Licences, and it is anticipated that the majority of the remaining Licencing Options will follow.

 

This progress is a further positive signal of the building momentum in oil and gas exploration offshore Ireland.

 

Financial Responsibility Assessment Requirements - Offshore Safety Directive

 

Turning to the Financial Responsibility Assessment requirements of the Offshore Safety Directive.

 

In 2013 the European Union introduced the Offshore Safety Directive, which provides for the regulation of upstream petroleum safety, with particular regard to major environmental hazard. This was the first legislative intervention by the EU that was specifically directed at the oil and gas exploration sector.

 

The Petroleum (Exploration and Extraction) Safety Act 2015 enacted in July 2015 transposed this Directive - integrating the Directive requirements with the safety regulatory system for oil and gas exploration and production activities introduced under the Petroleum (Exploration and Extraction) Safety Act 2010.

 

One of the key regulatory changes introduced by the Directive is the financial liability indemnity and insurance requirements conferred on petroleum undertakings, operators and owners. In addition the Directive requires them to put in place procedures for the prompt payment of compensation arising in the event of a major incident.

 

The Directive also obliges Member States to consider the technical and financial capacity of applicants for a petroleum authorisation; including consideration of the financial ability of the applicant to:

  • meet the costs of carrying out an exploration or development activity;
  • meet the costs of emergency response and subsequent remediation in the event of a major incident; and
  • to have, or to have put in place, appropriate insurance and or indemnity to cover potential liabilities. 

 

With that in mind my Department, having reviewed the position in other jurisdictions, developed a Financial Responsibility Assessment Guidance and Protocol which sets out for the sector the methodology used by the Minister to ascertain whether or not appropriate financial insurance and or indemnity is in place in respect of an application to carry out exploration drilling.

 

This Financial Responsibility Assessment Guidance and Protocol was utilised earlier this year in the consent process for the drilling of Exploration Well 53/6-1 on the Druid and Drombeg prospects.

 

 

 

Prohibition of Onshore Fracking

In July of this year the Oireachtas passed the Petroleum and Other Minerals Development (Prohibition of Onshore Hydraulic Fracturing) Act, which prohibits the use of fracking technologies in exploring for or extracting hydrocarbons onshore Ireland.

 

The legislation was initiated as a private members Bill by Deputy Tony McLoughlin as a response to the concerns of his constituents as to the potential negative effects of onshore fracking in their area.

 

Its progress through the Houses of the Oireachtas was the subject of cross-party co-operation, and was facilitated by the work undertaken by the Joint Oireachtas Committee on Communications, Climate Action, and Environment which held hearings on this issue, and considered an EPA commissioned report which examined the environmental impacts of onshore fracking on the environment and human health.

 

The Committee concluded that notwithstanding the potential economic advantages and enhanced energy security to Ireland of allowing onshore fracking, that those benefits were outweighed by the potential risks to the environment and human health.

 

Some technical amendments were introduced at the Committee Stage of the Bill to ensure that the complexities surrounding the use of fracking technologies were properly captured and that there were no unintended implications from the legislation.

 

A number of amendments proposed at the Report Stage of the Bill in the Dáil suggested extending the ban to include offshore fracking. However, the Government took the view that the issues raised to date related to onshore fracking alone. Therefore it would not be appropriate to accept such a major change in the legislation,

 

Many of the issues which prompted the legislation – for example concerns regarding groundwater, traffic, noise and impacts on agriculture and tourism would not apply offshore. As such the Government does not intend to extend the prohibition to the offshore.

 

BRexit

On the 29th of March this year the UK Government formally notified the European Council of the UK's intention to leave the European Union. This means that the two-year exit process is now well underway.

 

As you will be aware BRexit poses significant challenges for Ireland. However, we intend to be ready to meet those challenges.

 

As an example, post Brexit, Ireland will no longer have a direct gas or electricity interconnection with the European Union.

 

In that regard, An Taoiseach at his joint press conference with President Macron last Tuesday, expressed his commitment to support the planned Celtic Interconnector which will link the Irish and French electricity networks, improving our connectivity and also supporting the export-driven development of Ireland's renewable sector. 

 

The Government's Brexit Priorities can be summed up as:

  • Minimising the impact on trade and the economy;
  • Protecting the Northern Ireland Peace Process;
  • Maintaining the Common Travel Area with the UK; and
  • Influencing the future of the European Union.

 

All Departments and agencies have been charged with making Brexit planning a priority. Brexit has been their priority since before the UK vote in June 2016 and we have been planning accordingly.

There is strong co-ordination on this at key levels across Government and we will continue our co-ordinated efforts for the duration of the negotiations and beyond.

 

Research Initiatives

Turning to Research Initiatives. Research undoubtedly plays a pivotal role in revealing the hydrocarbon potential of our Offshore, and in ensuring that we protect our rich marine environment.

 

Petroleum Infrastructure Programme

Ireland is well served in having its own dedicated petroleum research vehicle, the Petroleum Infrastructure Programme or PIP, which was initiated by my Department in conjunction with industry in 1997.

 

 

Through PIP, which is funded by way of contributions from the holders of Frontier Exploration Licences; industry, my Department and academic researchers work closely to implement research projects capable of supporting efforts to promote exploration.

 

I look forward this afternoon, along with His Excellency the Canadian Ambassador to Ireland, to witnessing the renewal of the NAPSA or North Atlantic Petroleum Systems Assessment Agreement between Ireland and the Province of Newfoundland and Labrador, as represented by PIP and Nalcor Energy Oil and Gas Ltd.

 

The renewal of this agreement will consolidate the well- established joint research initiatives, including the North Atlantic Plate Reconstruction Project, which have enhanced understanding of the prospectivity of the Atlantic Margin Basins of Western Ireland and Eastern Canada.

 

iCRAG

In 2014 Science Foundation Ireland approved €26 million in funding for the Irish Centre for Research in Applied Geosciences or iCRAG programme. Funding provided by industry through the PIP played an important part in the funding bid. The first over-arching objective of iCRAG aims at significantly de-risking Ireland's offshore hydrocarbon exploration.

 

We are now two years into the iCRAG programme and I understand that substantial progress has been made on petroleum related research studies. I also understand that 2017 has seen significant levels of engagement between industry and iCRAG researchers.

 

 

ObSERVE

The on-going discovery, development and use of major hydrocarbon resources that occur under Ireland's seas have the potential to be very significant economic drivers for Ireland as well as delivering energy security. 

 

Major marine industrial activities such as seismic exploration and the development and exploitation of hydrocarbon resources in Ireland's geological basins require careful management and regulation to ensure consistency with Ireland's environmental obligations.  There remains a requirement for improved knowledge with respect to protected species in Irish Waters to inform and underpin appropriate management and regulatory actions while also facilitating significant industrial practices wherever possible.

 

In 2015, my Department in partnership with the National Parks and Wildlife Service of the Department of Culture, Heritage and the Gaeltacht initiated the innovative ObSERVE Programme.

 

ObSERVE is a significant acoustic and aerial data acquisition programme designed to acquire new environmental baseline data, with the aim of filling existing protected marine mammal and bird data gaps in key offshore basins. This collaborative approach has resulted in pioneering work that is very important to both regulators and industry, and its findings will provide a sound basis for sustainable growth and investment in the coming years.

 

The data acquisition phase is now complete and it is anticipated that the results will be available to regulators, industry and researchers in the second half of 2018.

 

Presentations on the ObSERVE Programme will form part of tomorrow morning's session on New Data and Technologies.

Conclusion

The last few years have been very challenging times for the sector. Whilst low oil prices have benefitted economies generally, sustained low prices have significantly impacted on exploration and development investment leading to retrenchment by industry.

 

At such a challenging time, it is very positive for Ireland that the industry has given a "vote of Confidence" in the Irish Offshore. The number and quality of exploration companies involved is a welcome development. This interest will hopefully result in an increase in the number of wells drilled; and ultimately in the realisation of producing fields.

 

The Government continues to be committed to exploration in the Irish Offshore and to acting innovatively and complementing the work being undertaken by industry and the research community.

 

I wish you well with today's and tomorrow's conference proceedings, and to the exciting times ahead.

 

END

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