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Redeveloped Penguins oil field a ‘missed opportunity’ for Sullom Voe, says Cooper

SIC development committee chairman Alastair Cooper.

OIL GIANT Shell has announced that it is to construct the company’s first manned installation in the northern North Sea – around 150 miles north east of Shetland – to redevelop an oil and gas field.

The company said on Monday that between 300 and 400 jobs would be required to build the floating production, storage and offloading (FPSO) vessel – and once it is operational, the Penguins field installation should provide around 70 jobs.

However the use of an offshore FPSO means there will be no extra business for Sullom Voe Oil Terminal, recently taken over by EnQuest, and Shetland Islands Council’s development committee chairman Alastair Cooper said it was “disappointing” – if not surprising – from a local perspective.

“The only thing that could come out of that is you might get … two or three more folk coming and going from Scatsta [Airport],” Cooper told Shetland News.

“As far as Sullom Voe is concerned that’s another opportunity that has been lost. I suspect they could have had a tie-back into part of the Sullom Voe line and brought the stuff ashore, but obviously the economics stacked up better with an FPSO, which is disappointing from my point of view. But we have to believe that EnQuest will turn the thing around.”

Shell’s vice president for upstream in the UK and Ireland Steve Phimister said the company had reshaped its portfolio in the past year and now plans to grow its North Sea production through “core production assets”.

The Penguins field, a joint operation between Shell and Exxon Mobil, was first discovered in 1974. It became operational in 2002 and the redevelopment will see oil from the field transported to refineries by tanker – while gas will be sent by pipeline to the St. Fergus terminal in Aberdeenshire.

Scottish Government minister for business, innovation and energy Paul Wheelhouse described it as a “hugely positive announcement”, coming in the wake of a partial recovery in oil prices to around $70 a barrel.

‘This significant investment by Shell and Exxon Mobil is further evidence of the future of the region and it will offer a significant boost to communities across Scotland, along with boosting the wider Scottish economy,” he said.

“We have always maintained there are significant opportunities remaining in the North Sea, even in the context of a low carbon transition, and that a strong and vibrant domestic offshore oil and gas industry will play an essential role in the future energy system we set out in our recently published energy strategy.”

But WWF Scotland said it found Shell’s plans “concerning” and is continuing to call on the UK to end its reliance on oil and focus on renewables.

“At a time when we need to move away from fossil fuels and increase investment in clean renewables, it’s concerning to learn that Shell has made the decision to redevelop the Penguins field,” said WWF’s acting director Dr Sam Gardner.

“We understand our economy will rely on fossil fuels for some time to come, but we must now see a clear vision to secure a just transition to a zero carbon future.”

General Election - 12 December 2019