Oil | Past | Ireland 2050

The story of oil in Ireland

Motor vehicles and paraffin lighting became popular at the turn of the 20^th century leading to oil depots being set up around the country. The first kerb side petrol pump was introduced in 1920 but it was not until after the Second World War that rapid growth in car ownership led to considerable growth in demand for oil for transport. Today, almost half of Ireland’s total energy use (47%) is comprised of oil imports, 70% of which is to fuel the transport sector, the rest being used to heat residential homes, particularly in rural areas, or by industry. Ireland imports all of its oil requirements either in the form of crude oil (37% of oil imports in 2014), refined at Ireland’s only crude oil refinery, Whitegate in Country Cork, or as refined products such as petrol, diesel or kerosene. There is a growing recognition that continued over-reliance on oil leaves us vulnerable to supply disruptions arising from geopolitical tensions, variability in price, investment uncertainty, and carbon emissions. For instance, diversification away from oil in the electricity and heat sectors occurred during the Suez Canal Crisis in 1956, the first oil crisis in 1973, and again in 1978. Combined with mounting concern over carbon emissions from fuel combustion, a gradual shift away from dependency on oil in the transport sector is expected. Alternatives include biofuels, electric vehicles, fuel cells, compressed natural gas (CNG), or biogas. Ireland has a target for 10% of transport to come from renewable sources by 2020, however, it is increasingly unlikely that Ireland will achieve this target by 2020.

Ireland imports all of its oil requirements: some in the form of crude oil for refining and the balance in the form of finished petroleum products. In 2014 around 35% of Ireland’s demand for road transport fuels (petrol and diesel and LPG) and home heating oil combined (LPG, kerosene and gas oil) was met with products refined from imported crude oil at Whitegate refinery in Cork Harbour.

Historically, large commercial users of heavy fuel oil (HFO) like ESB imported fuel oil directly to satisfy their own requirements for power generation at stations like Tarbert, Great Island and Poolbeg. At these power stations the ESB had constructed their own jetties and storage tanks to facilitate direct fuel oil imports. However in recent years the use of HFO has been phased out for power generation and replaced by natural gas in cleaner and more efficient power stations. Some of the oil facilities at the former oil fired power stations are now used as strategic oil storage locations.

The majority of oil use in Ireland in 2014 was used in the transport sector, with significant quantities of petroleum products also used for heating in residential and commercial building where fuels such as LPG, kerosene and gas oil are used.

Foynes

Oil storage terminal

20th Century

Historically oil was imported for use in lighting and heating. In the early days of oil use, the main aim of oil refineries worldwide was to produce kerosene for lamp oil and petrol was a waste product to be burned off. However, with the invention of the automobile and the development of road transport the demand for petrol grew. In Ireland the oil importation and distribution industry grew rapidly on the back of the demand for road freight and passenger transport.

In 1902 a depot for the distribution of lamp oil and kerosene was built in Dublin, with additional depots linked to the railways. The first kerb-side petrol pump was introduced in Nassau Street in Dublin. Despite the interest in the automobile industry, the development of the early oil retail network still depended on the movement of oil products in barrels by horse and cart.

An oil storage facility was first established in Foynes in the early 1900s but in a few short years, by 1906, there were fifty-one depots that supplied oil to the rapidly growing Irish motor industry and sold paraffin for lighting. At that time candles and paraffin oil were the most popular method of lighting, with electricity not yet widely adopted. Private bus operations that relied on oil began operating in the late 1920s but this progress was temporarily halted by the onset of the Second World War.

1940s and Ireland’s response to oil shortages during World War II

Due to World War II petrol rationing was introduced in 1939. Oil stockpiling in the years prior to the war limited the severity of oil shortages initially, it did not take long however for the bulk of supplies from Britain to be cut. Alcohol factories (using potatoes as feedstock) were bought by the government and oil companies were obliged to blend alcohol into petrol to extend the supplies. This practice has recommenced today – (see Biofuels Obligation Scheme). A few motorists converted their cars to run on town gas stored in a rubber tank of the roof. However, supplies of coal to make the gas were soon rationed which ended the practice. Spending on roads had stopped by 1941 and supplies of petrol for private motoring ran out in 1942. By 1944, any remaining petrol rations that were still supplied to doctors and clergymen were withdrawn.

Post World War II

With the post-war recovery there was rapid growth in car ownership and an increase in capital expenditure on roads. This led to an increasing demand for petrol supplies for the transport sector. By 1949 about 45.4 million gallons of oil were being imported for private road transport and home use. World prices of oil had fallen to the point where they were competitive with coal. In response, the ESB made provision for oil firing as well as coal in their plant mix, capitalising on the advantages of the relatively cheap and less bulky oil when compared to coal.

O'Connell Bridge

Dubin, 1950s

1950s and the Suez Crisis

During the Suez Crisis in 1956 Ireland was dependant on petroleum for 39% of its energy needs. The post war years saw a global expansion in the search for gas, oil and mineral resources. The possibility of oil and gas reserves in Ireland was raised in 1955 but while gas was later found, no commercial finds of petroleum were discovered. Whitegate refinery, built by a consortium of major oil companies, was designed to refine imported crude oil into finished refinery products. The refinery was opened in 1959 and still operates as of 2016.

Oil refining in Ireland

Since 1959, crude oil has been imported to Ireland to supply the refinery at Whitegate with crudes from the North Sea, West Africa and North Africa. The refinery in Whitegate was commissioned in 1959, being built by a consortium of global oil companies. The refinery is still functional, supplying heating and transport fuels to the domestic market and exporting residue (HFO) to overseas refineries for further refining in complex refineries. In recent years, refined products for commercial distribution can be delivered by road or ship to Dublin, Cork, Foynes and Galway. Dublin Port handles large deliveries of imported heating oil and transport fuel as well as refined products shipped in from Whitegate refinery.

1960s and 1970s oil crises

In June 1967, the Six Day Arab-Israeli war (also known as the 3rd Arab-Israeli war) led to a dramatic rise in oil prices, but prior planning averted a major supply crisis in Ireland. Car sales rose year on year through the 1960s as the economy developed and in 1971 the ESB completed a large oil-fired power station at Poolbeg beside the Pigeon House in Dublin. The Pigeon House, which had been producing electricity using oil since 1903, was decommissioned in 1976.

The Yom-Kippur war started in October 1973. The resultant energy crisis gave rise to long queues at petrol pumps, but in an economy which was growing annually at between 7- 9%; in spite of a 40% increase in the pump price for petrol, demand only dropped by 1.5% for the duration of the the crisis. The sharp increase in the price of crude oil and the effect on the price of petrol did mean that service stations in Ireland found it hard to make ends meet. An Industrial Energy Department was established at the Institute for Industrial Research and Standards (IIRS) as a government response to the oil crisis.

The oil crisis in 1979 brought a harsh realisation of the extent of our dependence on imported oil. By that time oil was supplying two-thirds of Ireland’s total energy demand. Driven by higher oil prices and uncertainty about the continuity of supply, diversification of energy sources became an urgent issue. Following a similar pattern of diversification against the risk of oil price shocks around the world, and a drop in demand for oil, the world oil price collapsed from around US $27 per barrel to US $10 per barrel in 1986 and remained steady at around US $20 per barrel for the next fifteen years.

Pigeon House oil fired power station

Active from 1903 to 1976

Residential sector heating oil in the 1980s and 1990s

In the late 1980s, as central heating became more prevalent, oil and gas accounted for 21% of the residential fuel mix, with over half of households enjoying central heating installed, three quarters of which were oil fired.

By the 1990s the sector with the second highest oil dependency after transport was the residential sector, where oil accounted for 30% of total fuel usage. Initially this was in the form of gas oil. In the census of 2011, CSO reported that over 70% of rural houses used oil for central heating while in urban areas natural gas was the dominant fuel being used in 52% of houses.

Transport in the 1980s and 1990s

By 2004 the transport sector accounted for 34% of Ireland’s primary energy demand. Private car usage was responsible for 38% of all transport energy usage since the number of vehicles on Irish roads had more than doubled since 1990. Energy use in transport was over 99% dependent on oil products, all of which were imported. Demand for fuels used in the transport sector was also growing; by 1996 the number of private licensed cars had reached the 1 million mark.

21st Century

The National Oil Reserves Agency was established in 2007 to manage reserve stocks of oil. Ireland holds 90 days of the nation’s previous year’s net oil imports in oil stocks. This means that a short term disruption can be managed through the sale of these stocks to the oil market operators.

The rising statistics of oil usage in the transport and residential sectors did not change much by 2011. According to the 2011 Census some 70% of rural homes recorded oil as their main energy source for heating with a lower percentage in urban areas (below 48%). While a majority of households relied on oil for heating, natural gas continued to gain market share in areas on the natural gas grid. Energy use in the transport sector was 97.5% dependent on oil products at an estimated cost of €3.5 billion. This was just over half the estimated total cost of fuel imports.

Again, in 2013, oil maintained the largest fuel share in the thermal energy market. In the transport sector, however, the recession of 2009 caused car ownership levels to drop leading to a decline in demand for oil for transport. During this time the Biofuels Obligation Scheme had also been introduced to increase the proportion of biofuel and biodiesel in all petrol and diesel sold. By 2013 the weighted share of biofuels as a percentage of petrol and diesel energy use was 4.8% and the Biofuels Obligation Scheme was raised to 6.4% of total fuel volumes.

Crude oil is the source of the wide range of refined products used in Ireland. These include LPG (propane and butane), petrol, kerosene, aviation fuel, various grades of gas oil and heavy fuel oil. Some overseas refineries produce bitumen and lubricating oils but these products, as well as aviation kerosene for air travel, are not produced in Ireland and are imported. Ireland imports all of its oil requirements: some in the form of crude oil for refining and the balance in the form of finished petroleum products. In 2014 around 35% of Ireland’s demand for road transport fuels (petrol and diesel and LPG) and home heating oil combined (LPG, kerosene and gas oil) was met with products refined from imported crude oil at Whitegate refinery in Cork Harbour.