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Laggan-Tormore a ‘triumph’ for the industry

UK energy secretary Amber Rudd addressing the Laggan-Tormore inauguration ceremony at the Shetland Gas Plant on Monday - Photo: Mike Grundon/BBC

UNLOCKING the gas fields to the West of Shetland has been described as a “triumph” by the UK energy secretary Amber Rudd during a visit to the Shetland Gas Plant.

The secretary of state was the guest of honour at the inauguration ceremony on Monday of the £3.5 billion pound Laggan-Tormore project, on Monday.

Six years after French oil and gas giant Total sanctioned the massive investment, the company’s chief executive Patrick Pouyanné was full of praise for his project team.

“This is quite a new frontier” and “a demonstration that this industry can do incredible things”, he told an audience of around 100 invited guests at the inauguration ceremony at the Shetland Gas Plant.

Amber Rudd was equally enthusiastic when she said she shared Pouyanné’s optimism, and gave a further commitment that the UK Government would do everything they could to support the oil and gas industry.

She said this “extraordinary investment” had been vitally important for the country’s energy security as it delivers gas to around two million households, and opens the door for more.

She said that there were still 20 billion barrels of hydrocarbons to be recovered from the North Sea and West of Shetland, and added that the UK government was committed “to create the right environment” to extract most of it.

Pouyanné added that Total was in the business of oil and gas production for the long term and while the low gas price was creating difficulties for the industry, it also forced companies to do things better and more efficiently.

He said gas was a clean hydrocarbon and therefore, clearly, part of the solution towards a future energy mix of gas and renewables.

He said the company’s drive to bring more West of Shetland gas fields on stream was helping the country to move away from coal as a major energy contributor.

The new infrastructure opening up the West of Shetland province would also make it easier and cheaper to bring further gas fields on stream.

Shetland Gas Plant manager Dave Wink explaining the complexities of the gas processing plant to UK energy secretary Amber Rudd - Photo: Total

“We don’t want to be seen as the bad boys, but as part of the solution,” he said.

Earlier in the day West of Shetland asset manager Simon Hare gave a guided tour of the £800 million plant, which became operational in February this year, about 18 months behind schedule.

Total has been quite open in admitting that they had underestimated the weather related delays they would experience while building a gas plant on peatland on a remote Scottish island.

The project essentially consists of four components: drilling the wells in 600 metres of water around 100 kilometres to the West of Shetland; constructing the sub-sea equipment, building hundreds of kilometres of pipelines, and building the Shetland Gas Plant where the gas is stabilised before being exported to St Fergus via pipeline.

Extracting the gas from below the seabed and pumping it to the new gas plant for processing is a hugely complex process which requires the use of vast amounts of anti-freeze as otherwise the gas would instantly freeze at water temperatures of -1 degrees.

Once onshore, water and oil needs to be separated from the mixture before the gas is being compressed to 150 bar so that it can be pumped down the pipeline to St Fergus.

Around 15,000 barrels of the 90,000 barrels of daily throughput is oil, which is being sold to the Sullom Voe terminal, next door, for export.

Currently around 230 people are employed on site, with about 80 working at any one time. Hare said that 70 to 80 people of the workforce were local.

Asked if the operation of the gas plant was viable when considering the low gas price, Hare said that in the “long term” Laggan-Tormore would pay its way.

The company has to take the long term view and that determines the investment,” he said.

Total operates Laggan-Tormore with 60 per cent interest alongside partners DONG (20 per cent) and SSE (20 per cent).

Speaking after the opening ceremony, Shetland MSP Tavish Scott said: “The fields West of Shetland have great potential and despite some delays, it’s great to have the new plant officially open.

“I discussed with Total today the importance of staff being based in Shetland and the contribution this makes to the Shetland economy.

“It has been a difficult time for the industry but the investment made by Total, DONG and SSE will help the wider economy and could be a turning point for the oil and gas sector.”

Newly-elected Highlands and Islands SNP MSP, Maree Todd, said Laggan-Tormore gas field would cover all of Scotland’s gas demand

“This is a huge level of investment and a statement of confidence in our oil and gas sector – despite the challenges currently facing the industry.”