Details of the financial deal struck between Shetland Islands Council and Total will not be made public for at least four weeks. The documentation for the lease of council land to build the £500 million gas terminal is still being drawn up following last Thursday’s agreement in Lerwick.
Meanwhile, the big Irish company Roadbridge has been awarded the contract to build the road and prepare the site for the £500 million gas terminal at Sullom Voe which will involve digging away 236,000 cubic metres of peat from the hillside. Work will get under way in mid-April.
Roadbridge, based in Limerick, is one of Ireland’s biggest civil engineering and building contractors with wide experience of constructing windfarms, motorways, gas pipelines, site development and even golf courses.
It has helped build Shell’s gas terminal in County Mayo, which is Ireland’s biggest building site and involves special requirements for dealing with peat. The gas development is highly controversial and has been the scene of numerous protests with a number of protesters jailed repeatedly.
The company is also one of the main contractors building a small oil terminal at Foynes in the Shannon estuary.
As yet there is no word of local companies landing sub-contracts to assist Roadbridge.
Another contract revealed this week is worth £200 million to Corus in Hartlepool to supply the 323 miles of steel pipes to bring the Laggan-Tormore gas ashore from west of Shetland to Sullom Voe and out the other side to connect into the pipeline to the St Fergus terminal near Peterhead. The export pipeline through Firths Voe will have a capacity of 665 million cubic feet per day, providing space for more oil companies to send their gas when their west of Shetland fields come on stream in future.
For the first of the four-year construction phase the workforce will be accommodated in existing hotels, guest houses and rented houses but a temporary accommodation module is to be brought in for the second and third years when up to 1,000 workers might be on the job. The module would be of prefabricated units and sited at Sella Ness.
In the longer term, Total is to pay to sponsor five young Shetland students a year for three years to train as process engineers to work at the new terminal.
A team from the oil company was due to meet Delting Community Council last night to discuss how its project is to be conducted.
The lease will earn money for the community in return for Total building partly on council-owned land. It includes an as-yet undisclosed element which will increase the amount paid to the community as the throughput of gas or its price rises.
The council said on Friday that “the terms of the agreement contain commercially sensitive information and therefore the council cannot make that public, at this stage”. It is understood it takes time for the document to be properly drafted.
The lease will not have to be renegotiated if and when more west of Shetland fields come on stream and pipe their gas through Total’s system. Instead, the community should reap the extra financial benefits without having to raise a finger.
Lacking its own PR machine, the council has not been quick to communicate what the main benefits of the deal will be to Shetland, despite having lobbied for several years for the gas terminal to be built in Shetland. Convener Sandy Cluness said last week Total’s presence could be worth £200 million over its 30-year lifespan, including from employees’ wages.
Councillor Alastair Cooper of Shetland North, who is also chairman of Delting Community Council, has been fighting for the terminal to come to Shetland for years. He said its arrival was “the sort of lift the community is needing just now”.
He said he hoped the gas terminal – like Sullom Voe itself – would continue much longer than its projected lifespan. “I sincerely believe that there is a whole heap of other fields to be developed west of Shetland and in the right environment a lot of that could come via the Total pipeline.”
The gas complex is likely to:
• Help prolong the jobs and income from the neighbouring oil terminal by sharing some of its costs, such as power, fire and emergency teams and providing 10,000-15,000 barrels of oil condensate a day;
• Provide 70-80 permanent jobs to operate and manage the new terminal;
• Provide lucrative sub-contracts and several years of employment in civil engineering, construction, accommodation, catering, transport and other areas;
• Yield increased income to community funds in the future as more gas fields come on stream and chose to pump through Shetland.
The deal was the culmination of at least three years of work by the council which started with lobbying Total and the government’s West of Shetland Task Force that building a gas hub on land in Shetland was a better option than the others being considered at the time, including piping gas directly to Scotland from west of Shetland fields by building a gas hub offshore to stabilise it, which was the government’s preferred option for a while to recover slightly more of the gas. At one stage coming to Shetland was seen as unlikely but the council kept courting government and the industry, advertising its wares.
After the deal was reached last Thursday council convener Sandy Cluness said it was “a significant decision for Shetland”. “I am confident that the agreement represents the best possible outcome for Shetland. Securing the gas plant on land means that Shetland as a whole, and the North Mainland in particular, will benefit from new jobs.
“Shetland is starting to see signs of the recession and this new facility will bring welcome jobs in the construction sector, as well as in the operation of the plant and ancillary services. I also hope it can be the start of breathing new life into the future of Sullom Voe Terminal and secure Shetland’s position as a key player in the energy industry for years to come. The facility provides a new source of jobs and opportunities for our young people, to give them confidence to make Shetland their home.”
Regarding the negotiations themselves, Mr Cluness continued: “The negotiation process was intense and prolonged over a period of time. That is nothing less than we expected. I would wish to convey my thanks to the council’s negotiating team who worked hard to secure the best possible outcome, taking account of all the risks and benefits associated with this project.”
He said the project was exciting and he hoped it represented “the opening of a highway into the next stage of North Sea exploration and production”.
The UK government signed off the Laggan-Tormore field development plan on Friday. Business, innovation and skills minister Lord Mandelson announced the move while in Aberdeen. It followed last week’s gaffe when Total headquarters in France jumped the gun by announcing the go-ahead for the £2.5 billion investment ahead of Prime Minister Gordon Brown’s statement to the nation and before it had received final approval by the department of energy and climate change.
With the government’s thunder stolen by the French there was to be no PM’s announcement. A visit to Shetland by one of the UK energy ministers, Lord Hunt, had been due on Thursday but was cancelled after Total and the council unexpectedly failed to seal their lease agreement on Tuesday. A government statement was issued on Friday after Mr Mandelson had signed off the development. In it the minister said the project would support about 2,100 jobs in the UK during its lifetime.