Frank Fahey sees Shell on the sea shore

[Malbekh]

Well, we started off with http://www.politics.ie/fianna-fail/8...na-failrs.html where our Frank generously provided temporary licences to this ship from hell until it could swap with its sister ship the Veronica. Next we moved on to the Lost at Sea saga, where the bold Frank patently favoured his constituents over other deserving causes, much to the annoyance of his department and the then attorney general.

But, we're not finished yet. This new thread is going to focus on yet another example of why Mr. Fahey is not fit for any office. It is my contention that our Frank is in the middle of a rehabilitation process with Brian Cowen. Regularly sent out to bat for NAMA, Frank forty gaffs Fahey is now embroiled in a stand-off between the government parties and the Ombudsman. Why on earth are FF and the Greens preventing the Ombudsman from getting a fair hearing and closing ranks around Fahey, particularly when you consider that Sargent and Fahey have had a hate/hate relationship over the years? Let's ramp up the pressure still further and examine another classic example of how we associate the word 'stroke' with Frank Fahey.

As with all stories, it's important to start at the beginning. The Corrib Gas Field was discovered in 1996, our first commercial gas discovery since the Kinsale Field in 1973. For a resource free country like ourselves, a very important find. The licence for the exploration of the field was granted in 1993, over a period of 11 years. The licence was given to Enterprise Oil and its partners. After the Shell bought out Enterprise Oil in 2002, the breakdown of the consortium is as follows; Shell (operator) (45%), Statoil (36,5%) and Marathon (now Vermilion) (18,5%).

The timing of this is important, because in 1975, Labour minister Justin Keating gave the state a 50% stake plus royalties of 6 to 7% in any commercial find. In 1985, Ray Burke, the corrupt FF minister, abandoned the stake and the royalties. In 1992, Bertie Ahern, the then finance minister, now currently under scrutiny with the Mahon Tribunal, reduced the tax rate applicable to the oil companies by 25% under intense lobbying from the oil companies. Not only that, but the companies were allowed to deduct tax against commercial costs over the previous 25 years.

In fairness to Ahern and Burke, the fact is that we are not a resource rich country, and therefore companies need to be given as many incentives as possible. Notwithstanding that, we have to deal with the facts that the Corrib Gas Field presents us with, and that is its current worth is anywhere between €9.5b and €22b, and our tax take from the profits is the lowest in any equivalent country in the world, money that we desperately require in our current extremis.

So back to 1996, and the consortium are sitting pretty with their multi-billion Euro and practically tax-free find, but with the rather major issue on how they were going to connect their find to the Bord Gáis network on the mainland. In order to connect to the network, the gas needs to be refined first. This can either be done offshore or onshore. Offshore is certainly rather expensive, millions of Euro more expensive than refining onshore.

Lucky for the consortium that they found a willing collaborator in Frank Fahey. As minster of state for the marine and natural resources, he was heavily lobbied by Enterprise Oil executive, John McGoldrick, resulting in the following concessions.

1. He introduced orders allowing acquisition of lands for the gas pipeline.
2. He granted the foreshore license allowing the consortium to land the pipeline.
3. He oversaw the sale of 400 acres of land from Coillte to the consortium to allow the construction of the refinery.

The acquisition of lands: For the first time in the history of this state, Compulsory Acquisition Orders were being used as a direct benefit to a company or conglomerate, rather than the State itself.

The foreshore license: This was granted in 2002 just before the General Election. It enabled the pipeline to be built within 70m of the inhabitants houses.

The Coillte sell-off: Here is Coillte's perspective on land sales:

Coillte owns an estate of 445,421 hectares, which is distributed widely around the country. Coillte's practice is to sell, lease or develop a limited area of non-strategic land, for purposes other than forestry. Most sales are made in response to local demand and typically comprise house sites, isolated dwelling houses, sections of recently acquired farms, small outlying forest properties and gravel pits. Land may also be sold to local authorities for infrastructure projects and for industrial or tourism projects. Properties sold are those considered not to be of strategic importance to the company's forest business, and properties whose sale would not adversely impact on plans for future management of forests and where value exceeds forest value. A Signing Off Committee within Coillte considers all land sales, with larger sales requiring approval from Coillte's Board of Directors.

Nothing there to indicate sales to international conglomerates for massive refining projects.

In 2003, an Bord Pleanala's senior planning inspector refused planning permission for the refinery because:

[I]t is my submission that the proposed development of a large gas processing terminal at this rural, scenic, and unserviced area on a bogland hill some 8 kilometres inland from the Mayo coastland landfall location, with all its site development works difficulties, public safety concerns, adverse visual, ecological, and traffic impacts, and a range of other significant environmental impacts, defies any rational understanding of the term “sustainability”.

In 2009, An Bord Pleanala objected to the current location of the pipeline as reported in the Irish Times:

Bord Pleanála says that up to half of the proposed nine kilometre onshore route for the Corrib gas pipeline is "unacceptable" on safety grounds, due to proximity to housing in Rossport and Glengad.

The board has suggested that Shell E&P Ireland and its Corrib gas partners explore another route, up the Sruwaddacon estuary, and has given the company three months to come back with detailed information on the route, design and safety of the high pressure pipe.

In a four page letter issued today, the board says that the current application "does not present a complete, transparent and adequate demonstration" that the high pressure pipeline "does not pose an unacceptable risk to the public".

It also says that the impact of construction on a designated rural area in Rossport would "seriously injure residential amenities" and the development potential of lands there. It notes that part of the pipeline route onshore was omitted from the application.

Shell E&P Ireland has until February 5th, 2010 to respond to a series of points raised by the board, which represents a significant setback for the project's time schedule.

All of which results in the delay of the pipeline and the introduction of Corrib Gas into the Irish network. It has also resulted in the cost to the State of millions of Euro in maintaining the Gardaí presence in Bellanaboy, the jailing of local inhabitants (justified or not), and negative headlines all over the world.

The man responsible for all this is Frank Fahey. Mr Fahey could easily have insisted on Shell refining the gas at sea, an option more expensive, but without all the added controversy. Instead Mr Fahey actively went out of his way to aid and assist Shell and its other consortium partners for no discernible reason whatsoever.

Mr Fahey is not interested in local people (not unless they are his constituents of course), he is not interested in the environment (hence Trevor Sargent's previous savaging of him), he is only interested in an obscure patronage that no one can define in any reasonable terminology.

Mikhail Gorbachev -- "What is the difference between a statesman and a politician?... A statesman does what he believes is best for his country."

This is the land of politicians, and Frank Fahey is at the bottom of them.

Tune in for more Fahey exploits next week.....

[PaddyJoe McGillycuddy]

Thanks Malbekh. Really good stuff! Great to see someone going through all this background and shining a light on the dark corners of FF cronyism and murky dealings.
Keep it up!

[goosebump]

The timing of this is important, because in 1975, Labour minister Justin Keating gave the state a 50% stake plus royalties of 6 to 7% in any commercial find.

And how many finds did this result in?

[tonic]

In 1985 it was Spring who made changes, not Burke.

[Mic]

The Coillte sell-off: Here is Coillte's perspective on land sales:

Coillte owns an estate of 445,421 hectares, which is distributed widely around the country. Coillte's practice is to sell, lease or develop a limited area of non-strategic land, for purposes other than forestry. Most sales are made in response to local demand and typically comprise house sites, isolated dwelling houses, sections of recently acquired farms, small outlying forest properties and gravel pits. Land may also be sold to local authorities for infrastructure projects and for industrial or tourism projects. Properties sold are those considered not to be of strategic importance to the company's forest business, and properties whose sale would not adversely impact on plans for future management of forests and where value exceeds forest value. A Signing Off Committee within Coillte considers all land sales, with larger sales requiring approval from Coillte's Board of Directors.

Nothing there to indicate sales to international conglomerates for massive refining projects.

Just in regard to this particular point. In fairness, wouldn't refining projects come under the heading of industrial projects?

Interesting background material, though.

If it's the case that it was too expensive to do any refining at sea, I suppose we coulda suggested to Shell they just leave it sit until such time as they found it would be cost effective ... too late for that now, I guess!

[tonic]

From a report written by Frank Connolly, no friend of the Government and I would suspect a good friend of S2S.

Stage 1
In April 1985, the then Minister for Energy, Dick Spring, introduced new exploration terms for so called marginal fields of less than 75 million barrels and announced that he would reduce State royalties and introduce a sliding scale of State participation. In September 1986, he announced the abolition of participation rights for marginal fields.

Stage 2
In September 1987, Ray Burke, who was given the energy portfolio by Taoiseach, Charles Haughey when the new Fianna Fáil government replaced the Fine Gael–Labour coalition earlier that year, announced new terms that included the exemption of all oil and gas production from royalty payments and the abolition of all State participation.
Mr Burke also introduced a 100% tax write-off against profits on capital expenditure for exploration, development and production for up to 25 years. Mr Burke told the Dáil that he thought the removal of the 50% corporation tax rate on profits would be “over generous” and the rate remained. Mr Burke explained that the radical departure from the 1975 terms was necessary in the light of the poor drilling results of previous years and the low price of crude oil.
He said he was gravely concerned that exploration in Irish offshore waters might end if the new regime was not applied.

Stage 3
In April 1992, the then Minister for Finance, Bertie Ahern, incorporated Mr Burke’s 1987 changes to the taxation regime into the Finance Act and also further reduced corporation tax on oil and gas companies from 50% to 25%. Mr Ahern told the Dáil that he intended to set out a definitive tax regime that was “designed to improve Ireland’s competitive position in attracting oil and gas exploration”.
“A particular feature is the provision for a special incentive rate of Corporation tax of 25%, which will apply to income arising under petroleum production leases granted by the Minister for Energy before certain specified dates.”

The announcement met with no opposition, with the Labour Party’s finance spokesman, Ruairi Quinn, declaring that he would “suspend judgement on the operation of the petroleum taxation regime and the changes being proposed in this Bill because, in fairness, the previous regime did not produce any kind of activity”.

As is clear from Dick Spring’s action in ’85 something needed to be done and then equally clear from Ruairi Quinn’s statement in ’92 above, Spring’s effort produced no reaction from the exploration companies, Burke’s later action in ‘87 similarly produced no reaction from the exploration companies, therefore in ’92 it was necessary to go further to get them working.

[Mic]

Goosbump, I'm assuming from the content of the OP that the answer to your question is zero.
If you don't feel like contributing any actual knowledge or analysis, maybe you could keep your condescension to yourself? I don't know if it's intentional, but I doubt if I'm the only one who finds it irritating when you send threads off the rails in this manner.

[goosebump]

Goosbump, I'm assuming from the content of the OP that the answer to your question is zero.

Correct.

[goosebump]

Mr Fahey could easily have insisted on Shell refining the gas at sea, an option more expensive, but without all the added controversy.

A bit like Justin Keating insisting that the likes of Shell hand over 50% of the value of their finds, which resulted in how many finds?

[Mic]

Thanks tonic for those details. You're a mine of information
Does it not seem odd though that we are so desperate to get oil companies interested that we're willing to forego all rights to it, except for 25% tax on profits? If some oil is uneconomic to extract because of the low price of oil, what is the rush to get it extracted while oil prices are low with zero royalties?