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Energy / Soaring gas prices lead to extra income for council

Shetland Gas Plant. Photo: Shetland News

THE RISE in wholesale gas prices is seeing Shetland Islands Council pocket some extra income.

The council receives additional payments from the Shetland Gas Plant if the price of gas processed there exceeds a set threshold.

In the first quarter of the year – April, May and June – the local authority, which is the landowner, received £100,000 in extra income, and more is expected in the second quarter.

Wholesale gas prices have soared this year, which has been attributed to increased demand and lesser supply.

This has forced some small energy companies to go bust as due to a cap on customer bills they cannot afford the higher wholesale price.

Shetland Islands Council infrastructure director John Smith said the extra income from the gas plant – which is located near Sullom Voe Terminal – expected for quarter two will be reported to elected members in November.

“While this extra income is welcome, we continue to monitor other energy costs, such as electricity and marine fuel, which may result in additional cost pressures to the council,” he warned.

The income boost in the first quarter of 2021 is a much changed picture compared to the whole of 2020, when the throughput cash was just £3,338.

Highlighting the topsy-turvy nature of the industry, in 2018 the total throughput income stood at nearly £745,000.

This income is on top of the base rent the council receives for the site.

Shetland Gas Plant, which is operated by international company TotalEnergies, started being built in 2010 and six years later it was taking in gas from fields north west of the isles by pipeline.

The facility processes the gas and then ships it off again through a 230km pipeline which helps to take the export to the St Fergus Gas Terminal in Aberdeenshire.