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Business / Ultra-deep water port report published

Dales Voe in Lerwick is a preferred location for decommissioning.

The arrival of the Buchan Alpha into Dales Voe for decommissioning in 2017. Photo: Shetland News

A REPORT which led to the Scottish Government picking Dales Voe as its preferred location for the UK’s first ultra-deep water port says the facility could have to secure 10 decommissioning projects to pay for itself.

The feasibility study, written by Ernest & Young and only made available to the public on Tuesday, also said an ultra-deep port could target £580 million of the £1.2 billion forecast to be spent on decommissioning.

The report’s figures assume that £10 million of public funding would be required to support the project.

The Scottish Government announced in September that Dales Voe in Lerwick was its preferred location for an ultra-deep port for decommissioning North Sea oil platforms.

The Lerwick Port Authority site has already been used by partners Peterson and Veolia to dismantle the Buchan Alpha platform, while Ninian North topsides are scheduled to be decommissioned there in 2020.

The Ernest & Young report – commissioned by the Scottish Government – was not made public at the time of September’s announcement, with officials working on Dundee’s ultra-deep bid disappointed with the decision.

The report has now been published, and it highlights how Dales Voe and Nigg Energy Park on the Cromarty Firth were identified by its authors as preferred locations.

They were whittled down from an initial longlist of 40 locations, which also included Lerwick’s Greenhead Base and other sites across the UK, before the Scottish Government picked Dales Voe.

The report says it would cost around £40 million to construct an ultra-deep water port at Dales Voe, and this “is estimated to support, in gross terms, an average 300 jobs” at the site.

It assumes that maintenance costs on an ultra-deep facility at Dales Voe could equate to around £200,000 a year over its 20-year operational lifespan.

The authors estimate that the Nigg site would cost 20 per cent more than Dales Voe to develop into an ultra-deep facility.

The Lerwick base was noted for its proximity to platforms, with 20 platforms within one day transit at a speed of six knots. Only four platforms are within one day of Nigg at this speed.

Shetland MSP Tavish Scott reiterated that it was “good news” for the isles that Dales Voe was picked by the government as its preferred location.

“Shetland is in the right place to offer competitive decommissioning services to the oil and gas industry,” he said.

“A deep water quay at Dales Voe is an essential part of that service and this report justifies public and private sector investment.

“Lerwick Port Authority have already won decommissioning work and the Buchan Alpha platform is being dismantled in front of our eyes.

“Shetland needs this new quay to keep this work flowing with the jobs that go with it.”

It was announced on Tuesday, meanwhile, that Lerwick Port Authority and local firm Ocean Kinetics had secured cash from the latest pay-out from the Scottish Government’s decommissioning fund.

The port authority’s funding will go towards the engineering design phase of a concrete decommissioning pad at Dales Voe that is intended to be in place before 2020.

Engineering company Ocean Kinetics will receive cash to go to a compact ROV (remotely operated vessel) and related equipment which will be used in development of a decommissioning cutting and inspection service.

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