Irish Government Reports Approve Delayed Shell Gas Pipeline

DUBLIN May 03, 2006 (Dow Jones Commodities News via Comtex)

Two major reports sponsored by the Irish government Wednesday gave Royal Dutch Shell PLC (RDSA) conditional approval to build its long-awaited gas pipeline across county Mayo in the northwest of Ireland.

Shell E&P Ireland said Wednesday the implementation of the reports' recommendations and the ongoing mediation process with community leaders and the government "can ultimately lead to a resolution of the outstanding issues."

The pipeline - from the EUR850 million-plus Corrib gas field 83 kilometers off Mayo's coast and across 9 kilometers of land - was delayed two years and resulted in the jailing of local protesters known as the "Rossport Five."

Environmental groups and the Rossport Five - five local Mayo men who were jailed for 94 days last year for their campaign to stop the pipeline - say unrefined gas being piped near houses puts several villages at risk.

But the government-supported reports released Wednesday say the pipeline can go ahead if Shell adheres to the reports' recommendations, which include a determination by Shell that pipeline pressure must not exceed certain limits.

One report was prepared for the government by U.K.-based Advantica Consultants, while another was prepared by the Corrib Technical Advisory Group, a group set up by Ireland's Minister for Communications Noel Dempsey.

The former said, "the pipeline design and proposed route should be accepted as meeting or exceeding international standards in terms of the acceptability of risk and international best practice for high pressure pipelines."

The latter report backed the recommendations in the Advantica report; Dempsey said both reports dealt "very comprehensively with the concerns about safety that some people earnestly held."

Shell said in April 2005 that if certain works weren't under way by June 1, 2005, it would be liable for EUR25,000 a day in standby costs and, if deferred to 2006, it would have to pay a remobilization fee of EUR2.5 million.

The Corrib gas field when developed will be produced over 15 and 20 years. The field was discovered in 1996 and was the first significant find offshore Ireland since Kinsale Head in southwest Ireland in 1971.

Shell and its Corrib partners - Norway's Statoil ASA (STO) with 36.5% and U.S.-based Marathon Oil Corp. (MRO) with 18.5% - plan to start production in 2007, but oil analysts say it's likely to be fourth-quarter 2008.

Corrib gas could transform the Irish market, which must rely on imports from the U.K. to meet around 85% its gas needs, according to the International Energy Agency; Shell hopes it will supply 60% of Irish natural gas demand.

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