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Energy / SIC to discuss impact of Clair oil field negotiations

Sullom Voe Terminal. Photo: John Bateson

COUNCILLORS will exclude the public from the Town Hall chamber on Tuesday when trying to reach an informed view on the state of crucial negotiations between oil companies BP and EnQuest that will determine the future of the Sullom Voe Terminal (SVT).

The future of the terminal could be in jeopardy should BP decide to bypass the facility and export oil from the massive Clair field through offshore loading rather than using the existing pipeline into SVT.

Chairman of the council’s development committee, Alastair Cooper, conceded on Monday that Shetland Islands Council (SIC) had “no locus” in the negotiation despite its outcome being of vital importance to the future of the isles.

“The council discussion has to be taken in private due to the fact that we will actually be discussing the activity of a third party,” Cooper said.

“I would like to believe that at some point in the future we will be able to come out and say something in public and god forbid it is bad news. I trust it will be good news.”

The SIC has already stated publicly that “if SVT cannot secure long term business on a satisfactory basis then there is a risk that the terminal would close in the medium term, perhaps around 2025.”

Clair phase one and phase one (Clair Ridge) are currently producing between 76,000 and 81,000 barrels of oil per day (b/d), but this could be ramped up to as much as 155,000 to 160,000 b/d within the next 18 months, which would be a major boon for SVT operator EnQuest if it manages to keep the BP business.

The Clair partners, meanwhile, are considering the options of more oil from Clair – the so-called phase three.

With this in mind, councillors will also be discussing the ongoing work of developing what is termed the Sullom Voe Hub to attract new business opportunities as oil and gas companies are increasingly looking west and north of Shetland.

A number of recent milestones such as first oil from Hurricane’s Lancaster field and extremely optimistic noises from BP as to its West of Shetland assets have led to hopes that in the medium term Shetland will benefit from the upturn in the offshore industry despite most of the oil bypassing the islands.

“There is quite a lot of activity offshore. Hurricane has started producing now, and yes it is quite small quantities right now but I trust they will achieve what they would like to believe exists out there,” Cooper said.

“If that happens then there is a good possibility that you could have a pipeline ashore.

“We have quite a lot of other gas activity in the West of Shetland, and I would like to see that coming in to Sullom Voe as well. So, yes, we do have some locus in the matter in terms of allowing the activity to come in, but when it comes to what happens within the Sullom Voe Terminal walls, we have no locus on the cost of producing through the terminal.”