Boost to plan for gas pipeline from west as Total and First Minister push the case

By NEIL RIDDELL

HOPES of gas from fields to the west of Shetland being piped through Sullom Voe, which could lead to a half billion pound investment and the creation of up to 50 permanent jobs at the terminal, have received a huge boost after a major player in the oil industry and Scotland’s First Minister gave their backing to the idea.

On a visit to the isles last Friday, French company Total, part of the taskforce set up to investigate how best to utilise the oil and gas finds, stated it was their “clear preference” for gas from the Laggan field – from where it hopes to produce up to 100,000 barrels a day – to be taken ashore in Shetland.

If gas from the Laggan field, 80 miles to the north west of Shetland, is brought ashore here it will require the building of a new gas plant at Sullom Voe at a cost in the region of £500m and Total hopes production can begin by the middle of 2013. As well as a large number of short-term construction posts, the move would be likely to create between 40 and 50 jobs at the terminal.

Business development director David Mendelson said he hoped a decision would be reached in conjunction with the UK government by the end of the year. It is a key part of the government’s plans to secure the country’s energy supply.

Northern Isles MP Alistair Carmichael said Total’s preference for Sullom Voe was a huge boost to the isles’ case. “The people who can judge what is commercially viable must be the companies like Total, and they will not be preferring Shetland or Sullom Voe as their base out of any sense of altruism or concern for Shetland’s economic future. Total’s first concern is Total’s shareholders, so I would hope that we will [now] be pushing at an open door.”

Discussions are at a fairly advanced stage, with third parties being invited to join the project to either build a new gas pipeline to Sullom Voe or to opt for an offshore hub. Mr Mendelson said that the initial process would be completed by the end of this month, after which Total and the government would settle on the most appropriate scheme.

SIC convener Sandy Cluness said he was “very heartened” by what Total had to say on their visit to Shetland. He was also encouraged by the words of First Minister Alex Salmond, who told Mr Cluness at a meeting on Monday that he would do all he could to help fight the council’s corner over the matter.

A spokeswoman for the now dismembered department for business, enterprise and regulatory reform (DBERR) said the viable options were still being evaluated and that the decision would be made “when it is practical”.

The DBERR spokeswoman said: “If there is one clear direction that’s economically viable and meets all the criteria that was set out by the taskforce, that’s the next bit. It’s for the government to consider what is best for industry, what is best for oil and gas, for all the stakeholders.”

Following last week’s cabinet reshuffle by Gordon Brown, Shetland’s politicians will now have to make the case to a new minister. Previous discussions had been conducted through DBERR and energy minister Malcolm Wicks was due to visit the isles this autumn, but the newly-created department for energy and climate change will now be responsible for making a decision on what to do with the west of Shetland gas finds.

Mr Carmichael is now seeking a meeting with the new energy minister, Ed Miliband, to press Shetland’s case and the MP is calling for a decision to be made as soon as possible.

It is understood that negotiations between the SIC, Mr Carmichael and the UK government have been hampered by a small number of officials who have a strong agenda in favour of ensuring the gas finds are routed through an offshore hub rather than at Sullom Voe.

But Mr Carmichael said the backing of Total meant “the wind is at our backs” and that a decision before the end of 2008 should be achievable. “We’re not trying to argue a theoretical case anymore,” he said. “This is a practical example of a company that wants it to work to our benefit.”