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Ireland lays down “symbolic” new oil, gas extraction ban

24 February 2021 Cristina Brooks

Ireland's government bolstered efforts to achieve the country's net-zero emissions target by banning new oil and natural gas exploration earlier this month, although the move won't impact currently declining gas and non-existent oil production.

The cabinet's approval of the ban, announced on 2 February, immediately stops acceptance of new oil and gas exploration license applications by Ireland's Department of the Environment, Climate and Communications, formerly its Department of Communications, Energy and Natural Resources.

The cabinet rubber-stamped the ban despite Ireland's lack of proven commercial oil reserves or oil production. Gas exploration licenses have been awarded at the Kinsale Head, Ballycotton, Seven Heads and Corrib fields since the 1970s.

The government also added legislation banning such licenses to the country's net-zero bill, Climate Action and Low Carbon Development (Amendment) Bill 2020, now in Ireland's lower legislative house, the Dáil, where it is under review by the Committee on Climate Action.

The move progresses a three-year-old pledge to ban oil and gas exploration.

Ireland's previous government tried to enact a ban under the failed Petroleum and Other Minerals Development (Amendment) (Climate Emergency Measures) Bill 2018 on the advice of an independent body, the Climate Change Advisory Council, but Climate Action Minister Richard Bruton stopped the bill in the Dáil, arguing it would have increased Ireland's gas imports.

The latest legislative effort, the draft Climate Action bill, not only enacts the ban, it also backs up Ireland's 2050 net-zero greenhouse gas emissions target with sectoral targets, annually-revised Climate Action Plans and five-year carbon budgets.

But the oil and gas extraction ban by itself is more of a gesture. "We believe that this is primarily a symbolic gesture in support of climate change and follows the lead of Denmark in doing something similar," according to David Aron, managing director at London-based Petroleum Development Consultants, in a comment to IHS Markit, referring to Denmark's agreement to cancel future North Sea oil and gas license application rounds and end existing production by 2050 in December.

The ban might increase gas imports from the UK, Aron said, which are expected to reach about 141 billion cubic feet (Bcf) in total this year, according to IHS demand outlook data. From 1978 to 1995, Kinsale Head along with Ballycotton and Sevens Head, supplied all of Ireland's gas. Ireland also met its gas demand with imports through a UK pipeline starting in 1997 at 14 Bcf per year, and imports through the pipeline have risen steadily over the decades, reaching 98.9 Bcf in 2019.

Ireland started using gas from its own fields for the first time since the 1990s in 2016, when the Shell-operated Corrib field contributed the equivalent of 50% of Ireland's gas consumption, but IHS Markit analysts looking into Ireland's energy security at the time concluded that "even with Corrib's contribution, Ireland's supply diversification is relatively limited," in a country profile. Shell was the largest gas producer in Ireland until it exited Ireland's upstream sector in 2018.

Domestic gas production today comes exclusively from Corrib field projects now operated by Norwegian state-backed company Equinor. The company's production in the last decade peaked at 0.1075 Bcf/d, or 19,000 barrels of oil equivalent per day (kboe/d), but its production was expected to reach 0.0622 Bcf/d (11 kboe/d this year), IHS E&P data shows. This implies annual gas production in Ireland is about 23 Bcf.

The new ban will not affect existing licenses at the Corrib field held by Equinor, nor one proposed project by Europa Oil & Gas, said Aron. The fate of a second application, now held by DNO but in the process of being transferred to Europa, is unknown at this point, but Aron said it "appears to be acceptable under the new legislation."

Campaign and party pressures

On the publication of the ban, Irish climate campaigners praised the government's move but also called on it to cancel existing licenses.

For example, Friends of the Earth Ireland (FOEI) will be calling for an end to all oil and gas exploration with a specific date, having had success with its ban campaign where activists pressured their Dáil representatives, called Teachta Dálas (TDs). "The campaign to keep fossil fuels in the ground is strong and sustained here in Ireland. Credit is due to the many grassroots groups and activists who have contacted their TDs, signed petitions and took to the streets on this issue for many years," said Kate Ruddock, deputy director at FOEI.

On the other hand, the Irish Offshore Operators' Association criticized the ban's impact on Irish energy security in a statement. It welcomed the government's preservation of existing licenses and said it would assist development of existing infrastructure, carbon capture and storage, and hydrogen.

The bill must pass through the Houses of the Oireachtas before becoming law.

Last year's election created a three-way ruling alliance of Fine Gael, Fianna Fail, and the Green Party. The governing coalition then published a platform that pledged to halt new licenses being issued for the exploration and extraction of gas.

The government also plans to legislate a ban on developing LNG terminals in the future, as there are none currently. Ireland's High Court recently canceled planning rights for the contested Shannon LNG terminal project following a lawsuit by Friends of the Irish Environment. The Port of Cork has also axed preliminary agreements to host NextDecade's planned Floating Storage and Regasification Unit, which was set to import LNG.

Future climate action could run into obstacles as Ireland's EU membership makes it part of the Comprehensive Economic and Trade Agreement, which features a mechanism that allows investors to sue states, according to Irish grassroots group Not Here Not Anywhere. Ireland also faces similar issues as a signatory of the Energy Charter Treaty.

Posted 24 February 2021 by Cristina Brooks, Senior Journalist, Climate & Sustainability, IHS Markit

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