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BP extends future of Sullom Voe

SHETLAND’S political leaders have welcomed news that the working life of Sullom Voe oil terminal has been extended until 2050.

On Thursday morning oil giant BP announced a £4.5 billion investment in the UK’s largest oil and gas resource, the Clair field north west of Eshaness.

The Clair Ridge project due to come on stream in 2016 could produce up to 640 million barrels of oil and provide hundreds of jobs over its 34 year life.

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Furthermore the Clair partners – BP, ConocoPhillips and Chevron – have successfully appraised an extension to the field dubbed South West Clair, and found more hydrocarbon reserves, which could prove the field is even bigger than the currently known seven billion barrels of oil and gas.

While Clair oil and gas will flow through Sullom Voe, there is less certainty about the direction of travel of Schiehallion oil currently transhipped via the terminal and accounting for 40 per cent of its business.

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BP’s £3 billion redevelopment of the west of Shetland Schiehallion and Loyal fields could lead to transhipment direct to market, losing the terminal and the council’s harbour operation valuable business.

Nevertheless council leader Josie Simpson was upbeat about Thursday’s developments. “This is great news for Shetland. When you go back to when oil first came to Shetland the terminal should have been shut by now. They are now talking about 2050.

“It’s never going to be up at the peak of what it was at the height of it, but it’s going to extend the life of Sullom Voe.”

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However Mr Simpson said that while the Clair Ridge project would feed money into the local economy, it would not alleviate the financial problems the council faces.

“We have to keep going down the same road that we are travelling on at the moment for the next two or three years,” he said.

Lerwick North councillor and former Lerwick Port Authority chief executive Allan Wishart said he believed the news would instil confidence in Shetland’s business sector.

“This puts a big injection of confidence into the community. I don’t think it’s going to be anything like the volume of activity we saw in the ‘80s, but nevertheless there will be a big spin off for the economy – for transport, for the harbours, engineering and accommodation right through to the local shops.

“The caveat is that I don’t think there is going to be the windfall that we have seen over the past 30 years when money piled up in the charitable trust and the council.”

BP said it would be using the latest technology to maximise recovery from the fields, including the world’s first offshore deployment of advanced LoSal low salinity water reservoir injection at Clair Ridge.

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The development will see two new, bridge-linked platforms installed in 2015 with a design life of 40 years. To reduce their environmental impact, they will be powered by dual fuel power generators, incorporating waste heat recovery technology. Vapour recovery will also be used to capture and recycle low pressure gas for use as fuel or for exporting to shore.

The partners are looking to employ polymer flood technology on the Schiehallion and Loyal fields redevelopment to improve the sweep of the reservoir and overall recovery of oil.

Speaking in Aberdeen on Thursday, BP’s group chief executive Bob Dudley said the company was making its largest ever investment in a single year of £4 billion in the four projects at Clair, Schiehallion, Loyal and Devenick, in the central North Sea.

This follows a £1 billion sale of the company’s assets following last year’s catastrophic Gulf of Mexico oil spill, the worst ever.

“We have a major presence in the North Sea today, operating around 40 oil and gas fields, four onshore terminals and a network of pipelines that transport almost half of the UK’s oil and gas production. And as demonstrated by today’s announcements, the region still offers competitive, attractive investment opportunities which we will pursue,” Mr Dudley said.

Prime minister David Cameron was in Aberdeen during a rare trip to Scotland to herald the investment and stress the importance of the oil and gas industry to the UK economy.

However first minister Alex Salmond was quick to criticise the Westminster coalition for its tax hike on the offshore industry, saying that the amount of development would have been far higher if the government had not raised taxes to pay for the reduction in fuel duty last year.

On that subject, northern isles MP Alistair Carmichael said: “I know that some within the industry were concerned after the tax changes we saw in the budget. As the prime minister made clear in Aberdeen today, the government is committed to working with the sector to help boost investment in the North Sea.”

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Concerns about BP’s environmental record surfaced again on Wednesday when the four major green charities signed a joint letter urging energy secretary Chris Huhne not to grant a licence to drill on the North Uist field 80 miles north west of Shetland.

The company’s environmental statement presents a worst case scenario of a spill twice as large as the Deepwater Horizon affecting Shetland.

The RSPB, WWF Scotland, Greenpeace UK and Friends of the Earth Scotland have sent a joint letter to Mr Huhne raising their concerns and complaining that they had not been informed about the public consultation on the plans, which ended last week.

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