By JOHN ROBERTSON
Sullom Voe is to become the hub for all gas discovered west of Shetland after Total confirmed its planned new pipeline would be big enough for use by the other oil companies exploring in the region.
The French oil company announced on Friday it is still on course to invest £2 billion in the project to connect its Laggan-Tormore fields to a new gas plant at Sullom Voe and onwards through a new pipe connecting into the Frigg pipeline to the St Fergus gas terminal near Peterhead.
The pipeline could play a major part in opening up big oil and gas reserves in the Atlantic frontier sector by providing the first major trunk route from the west for other oil companies to feed their gas into, greatly reducing their costs in developing new finds.
Total UK managing director Roland Festor told The Shetland Times on Friday that fields which have already been discovered could be connected to the pipeline and it would generate new enthusiasm for companies to explore for more oil and gas west of Shetland. He said: “This is really the important thing. Once there is infrastructure everybody is much more encouraged to explore.”
Mr Festor said he was keen for the people of Shetland to know as early as anybody else what is intended. The main spin- off for the islands is the £500 million gas treatment plant at Sullom Voe which began as one of several options but was confirmed late last year as almost the unanimous choice of 48 companies involved west of Shetland which took part in Total’s consultation. Mr Festor called it “a first important milestone for Shetland”.
As reported previously several hundred workers could be needed to build the plant and then 50-60 permanent jobs could be created to operate it. Mr Festor said these would be new jobs additional to those already at Sullom Voe. The new gas plant is separate to the terminal’s existing gas processing plant which is set for a £60m refurbishment this summer.
Total’s plant will extract the water and condensate (a light form of oil), dry and compress the gas and make it the required specification to feed into the Frigg system going to St Fergus, which is owned by Total, and then feed into the nation’s mains gas network. Gas from the west of Shetland is already piped to Sullom Voe from the Foinaven and Schiehallion fields but is pumped back out again into the Magnus fields to help extract more oil.
At one time Total had hoped work on the gas plant would have started last year but the whole Laggan-Tormore project ran into delays and economic doubts caused by a gas price collapse. Work on the plant is now likely to start in 2011 along with gas field drilling, Mr Festor said, and completed by the end of 2012. First gas should arrive for processing around mid-2013.
He said the pipeline would be of a size “big enough to make everybody happy”. “The Laggan-Tormore operators have agreed to make it bigger than their own needs so that all the companies who have showed an interest for exporting gas to the market from west of Shetland will have a route to export their gas.”
Despite progress so far the entire project could still be derailed. The company aims to be ready by September to officially sanction the spending but it depends on approval from the UK government and good progress being made with tenders for the work.
“We have to cross our fingers that what we plan to do will be achieved,” Mr Festor said. “It would be great for everybody. It could be an excellent project for west of Shetland and would create the export route for the other potential partners.”
The west of Shetland sector is estimated to hold about six per cent of the UK’s gas requirements in potentially more than 40 wells. The Laggan field is close to the giant Clair oil field with Tormore nine miles south-west of Laggan. Further out is a huge oil and gas field operated by Chevron, called Rosebank-Lochnagar, 109 miles from Sullom Voe.
SIC convener Sandy Cluness welcomed the latest stage in the process this week. “We’re glad to see that it has got this far,” he said, after the council, led by chief executive Morgan Goodlad, had been working on the proposals for a couple of years.
The convener has also had a meeting recently with TAQA, the subsidiary of the Abu Dhabi National Energy Company which bought Shell’s shares in Sullom Voe and most of its interests in the northern North Sea in December and is now the biggest single shareholder in the terminal.
Mr Cluness said the company was anxious to increase production from its oilfields and very keen to promote Sullom Voe, a desire he said had been lacking to some extent in recent years.
Shetland MSP Tavish Scott said Total’s investment was “excellent news” and the gas plant was welcome confirmation that Sullom Voe is to continue to play a major role in Shetland’s economy for decades to come.
“It is a clear sign that, even with the world in recession, the oil companies have confidence in the future of their west of Shetland developments and in Shetland’s role in support of them. No company invests in a £500m plant if they don’t expect it to be in use for a good few years.”