Premier Transco, a 50/50 joint venture owned by British Gas and US energy group KeySpan, is planning to invest about £120 million (€152 million) on a 170-kilometre natural gas pipeline linking Belfast and Dublin.
The company plans to supply gas directly to major industrial users - in the partially deregulated electricity supply business at first - and it has invited potential customers to book capacity on the pipeline. The size of the pipeline, which will extend the existing interconnector between Belfast and Moffat in Scotland, will be determined by the response of potential customers.
Launching a 90-day "open season" period, during which it will quantify potential demand, Transco's chairman, Mr Jim Rooney, said it would guarantee a fixed tariff of 3.8p per therm for 15 years, rising only with inflation.
Mr Rooney said Transco needed a contract to supply gas to at least one independent power generator to make the plan viable. "Two big customers would make us feel very comfortable," he said. The company plans to commence phased construction next year, with the project due for completion in autumn 2002.
Asked whether the company had already initiated contact with any of the groups - about 10 at present - which plan to build gas-fired power stations, Transco's project development manager, Mr Paul Whittaker, said it had and that responses had been "very positive". "We'll only build to actual demand," he said. He added, however, that the pipeline's capacity could be expanded if demand grew.
Transco said it could supply users of more than nine million therms of gas each year and would not be confined to the electricity generation market.
The firm's development manager, Mr Martin Regan, identified citric acid firm ADM in Ringaskiddy Co Cork, CRH subsidiary Premier Perclase, food group Glanbia, Irish Sugar and Irish Fertiliser Industries as potential "eligible" customers. Mr Regan accepted that any arrangement to supply gas outside Dublin would require an interconnection with the existing network operated by Bord Gais Eireann (BGE).
Mr Rooney said the firm anticipated doing business with BGE to transmit gas through its network. "Under EU and Irish law, they will co-operate with us on this." He added: "Bord Gais has a code of operations which allows third parties to transport gas on one system."
Mr Whittaker said he viewed the plan as complementary to Enterprise Oil's proposals to exploit the Corrib natural gas field off the coast of Co Mayo.
BGE said it was proceeding with a £50 million plan to expand its existing interconnector with Scotland by 70 per cent and to build a new interconnector, at an estimated cost of £270£300 million. Both plans are subject to regulatory approval.
Asked whether BGE was likely to do business with Transco, the State-owned firm's head of transmission, Mr Ger Breen, said it would be happy to assess the proposals. "We have to look fairly closely in the next few weeks at what they're saying," he said.
A spokeswoman said BGE had already embraced competition, stating that 70 per cent of its gas was imported.
An earlier proposal by Transco to develop a pipeline in a joint venture arrangement with Bord Gais has been dropped.
Transco's initiative was welcomed by the Minister of State for Public Enterprise, Mr Joe Jacob, who said new capacity to supply would be required given the steady increase in demand for gas.
The company said it would seek planning permission for its pipeline once the "open season" process was complete. It hoped to establish agreements with property owners to secure access to build and maintain the pipeline. If required, it would seek arrangements similar to Compulsory Purchase Orders used by State-owned firms.
