Ocean Kinetics - The Engineering Experts

Could oil discovery be a boon for Sullom Voe?

LOCAL politicians say they hope a major discovery west of Shetland that could produce over one billion barrels of oil will provide a “significant opportunity” for Sullom Voe to attract new business.

Hurricane Energy announced the results of survey work on the Lancaster and Halifax oil fields, which together represent the “largest undeveloped discovery on the UK continental shelf”.

Northern Isles MP Alistair Carmichael and SIC development committee chairman Alastair Cooper both welcomed the news and called for the Oil and Gas Authority to work to secure the best possible deal for the islands as well as the wider UK.

But environmental groups such as WWF Scotland continue to express concern over future oil exploration in light of the growing threat of climate change.

Hurricane Energy chief executive Dr Robert Trice said the survey revolved around the discovery of a one-kilometre hydrocarbon column at the Halifax well, which is linked to the existing Lancaster field.

The region, known as the “greater Lancaster area”, is located 60 miles west of Shetland and production could start in 2019.

Trice descried it as a “highly significant moment” for the company: “We believe that the greater Lancaster area is a single hydrocarbon accumulation, making it the largest undeveloped discovery on the UK continental shelf. These are exciting times for Hurricane.”

Carmichael said the discovery was “good news” for the oil and gas industry, and hopefully Shetland in particular.

Highlands and Islands MSP John Finnie, of the Scottish Greens. Photo: Shetland News/Chris Cope.

“We need to hear from the company when they expect production to start and what they intend to do with the oil when it is produced,” he said.

“Given its location I hope that there would be a significant opportunity for this to bring business to Sullom Voe.

“Shetland’s economy continues to derive benefit from the oil and gas industry. This discovery shows that there [are] opportunities for years to come.”

Cooper said that, while it was a “piece of very, very good news”, he feels negotiations must achieve the “best deal” for Shetland as well as the UK.

“As far as we know, it’s going to be ‘offshore loaded’,” he said. “That’s Hurricane’s concept. The only thing I think is that if there’s significant volumes, it may be that in order to achieve those significant volumes, they’ll have to think about a pipeline.

“A pipeline could realistically come to Shetland, so I’m looking for volumes sufficient to justify a pipeline.”

But with EnQuest in the process of assuming control of the terminal at Sullom Voe from BP, Cooper is concerned that is “not necessarily the best time to do business”.

“I think we need to get the Oil and Gas Authority involved to get the best deal, dare I say, for the UK and hopefully Shetland as well.”

Last week the Oil and Gas Authority awarded 25 new licences for oil exploration, including five to Statoil in partnership with BP for the east of Shetland.

However, the licences were confirmed just weeks after several major oil companies signalled their intent to do more to combat climate change.

North Mainland councillor Alastair Cooper.

Statoil unveiled a climate roadmap, while Shell chief executive Ben van Beurden admitted that “social acceptance” of an oil-based energy system was “disappearing”.

Highlands and Islands list MSP John Finnie, of the Scottish Greens, pointed out there was “a wide consensus that the biggest challenge we all face is climate change”, and his party “will be alone among the political parties in not salivating at this latest find”.

“If we are genuinely committed to driving down emissions and the resulting damage to our planet then we must move our economy away from fossil fuels, a finite resource, to the infinite resource of renewable energy to secure our future,” Finnie said. 

“That transition to a low carbon economy can deliver more and better jobs, 200,000 by 2035, resulting in a safer and more stable economy and stronger communities.”

WWF Scotland director Lang Banks said more needed to be done to create jobs from industries which cut emissions.

“Given the growing climate change threat, the opening up new areas for oil and gas exploration is not something we should be breaking out the champagne about,” he said.

“To reduce the risk of dangerous global climate change, science tell us that the vast majority of known fossil fuel reserves need to be left in the ground and not burned.

“What we really need to see is a concerted effort to create jobs from cutting carbon emissions. But, instead we’re seeing clean onshore wind and solar companies getting the rug pulled out from under them while the polluting oil and gas industry gets even more help to drill every last drop from under the North Sea.”