OIL giant BP has dropped its plans to build a £500 million gas sweetening plant at Sullom Voe oil terminal in Shetland.
The decision comes as a further blow to the local economy, which had expected to see 500 construction jobs created over three years along with 33 full time posts once the plant became fully operational.
In March the multinational announced that it had put the project on hold following the recent collapse in the price of oil.
BP have reconfigured their approach to the North Sea province since the drop in prices, but insisted last week they were fully committed to the west of Shetland region with the positioning of the FPSO Glen Lyon at Schiehallion and the final installation of the Clair Ridge production rig.
On Thursday a BP spokeswoman said the company also remains fully committed to Sullom Voe terminal to ensure it has “the necessary facilities to reliably support long-term oil and gas production from fields to the west and east of Shetland”.
She added that BP now believe there are cheaper ways of processing gas from west of Shetland using existing facilities rather than building new.
“Given the current business climate and as a result of revised west of Shetland sour gas production modelling work, the Sullom Voe Gas Sweetening (SVGS) partners have concluded that a more cost-effective solution to meeting future gas sweetening needs for the region is possible,” she said.
“Consequently the revised SVGS project will focus on enhancing (and potentially expanding) the gas sweetening capability of the existing plant at SVT and maintaining the existing offshore sour gas “scavenging” capability on Clair and Schiehallion.
“Construction of the originally envisaged new SVGS plant at SVT will not now proceed.”
Local councillor Alastair Cooper said he was not surprised by the decision, but remained concerned that Shetland was losing out on significant employment opportunities.
“The fact that this is not coming to Shetland will have an impact on local contractors,” he said.
“Given the pundits saying the price of oil is likely to stay as it is, I suspect there will be further job losses and further cuts, which will not be pleasant.”