Few observers have doubted there was a commercially viable supply of natural gas in the Corrib field and the deal reached between Bord Gais and Enterprise Oil means gas will be supplied to the west. The innovative agreement, the State's first major public-private partnership, means Enterprise, with its joint venture partners Marathon Petroleum and Statoil, will sell gas directly to the industrial market and to Bord Gais.
The £100 million (€127 million) link between Pollathomas, Broadhaven in Co Mayo and Galway was one of two considered by the consortium.
Its alternative was to connect gas with the Bord Gais network in Dublin. This would have cost more than £120 million.
Enterprise has yet to make a statement, but it is understood the consortium will co-own the Broadhaven-Galway pipeline with Bord Gais. In what is described as a "very clean" arrangement, the State-owned firm will own the pipeline while the private group controls the gas running through it. The consortium will fund more than half the pipeline, which will be constructed by Bord Gais.
In turn, Bord Gais plans a loop-line linking Dublin, Galway, Limerick and Cork. Some reports suggest the Government has already sanctioned expenditure of £200 million for this project.
While compensating for expected over-capacity on the existing Dublin-Cork link, the crucial element of this proposal is that it will connect the gas network to the west, which has a clear infrastructure deficit.
As well as providing energy for heavy industry which may move to the region, the supply will also allow the construction of a new electricity generation plant in the west. Bord Gais plans a power generation plant in joint venture with ATCO Power and Aughinish Alumina at its Co Limerick plant. In addition, this week's agreement is understood to be forward-looking and may provide access to the national network for other gas supplies which may be discovered off the west coast.
Underlying all these developments is the rapid depletion of the Kinsale gas field off Co Cork, which is nearing the end of its productive life. The Corrib field, expected to be productive for 15 years, will meet increasing demand for energy and compensate for the loss of Kinsale supplies.
While Bord Gais wants to counter the loss by constructing a second interconnector parallel to its existing link between Dublin and Moffat in Scotland, this is unlikely to go ahead following this week's deal.
The chairman of Bord Gais, Dr Michael Conlon, accepted earlier this year that the Government was unlikely to sanction expenditure of £300 million to implement this plan "if Corrib can show clearly that it's coming on stream in time".
The position of the Minister of State for Public Enterprise, Mr Joe Jacob, was that the second interconnector would be approved "if" private developers did not commit to building infrastructure to increase supply by the end of the year. Mr Jacob has said he would decide on whether the second interconnector could go ahead in October, if the viability and scale of the Corrib development was known.
