Shetland is set to benefit from expansion of the Clair oilfield west of Shetland which will help keep the Sullom Voe Terminal open to 2050 and beyond.
BP announced today it was proceeding with its partners in the £4.5 billion second phase development of the giant field which is the biggest in the UK Continental Shelf.
Production from the new twin-platform Clair Ridge project to the north of the existing platform is expected to begin in 2016 and could last 40 years. It will feed into the existing Clair pipeline to Sullom Voe, adding in up to 120,000 barrels a day at its peak.
Clair currently produces up to 60,000 barrels a day but that will have tailed off by the time Clair Ridge comes onstream.
BP also revealed that it had successfully investigated the area it is calling South-West Clair with encouraging results from its first well. As well as proving that the area contains an extension to the main Clair oil reservoir BP discovered a new, shallower reservoir. More wells are being considered with a view to future production.
The oil company is also progressing with its plans to drill in very deep water to the north-west of Clair to tap the controversial North Uist oil field.
Although the Clair Ridge development has been known about for several years the announcement that it has now been approved by the UK government was greeted as “good news” by Shetland Islands Council convener Sandy Cluness.
He said: “Hopefully it will create some degree of optimism in Shetland because any new development like this is important to us. I think there is an awful lot more oil there than even BP is saying so it augurs well for the future of Sullom Voe.”
Sullom Voe terminal manager Lindsay Boswell said: “It’s good news for the terminal because it is a long-life field with steady production.”
The flurry of field development and new production will mean more oil-related shipping through Lerwick and Scalloway, bringing business and people, and there will be a requirement for more plane and helicopter flights through Scatsta Airport ferrying all the extra offshore workers.
However, concern has again been expressed that the terminal and the council-owned port could lose more oil and revenue than is brought by the Clair expansion if BP decides to load its Schiehallion oil offshore in future. A £3 billion redevelopment of that field will see a new production ship brought onstream in 2016 which could end the practice of shipping the oil to Sullom Voe for storage and export.
Clair currently produces about one-third as much oil as the east of Shetland fields still send to Sullom Voe. Mr Boswell said Clair Ridge’s need for two oil storage tanks at Sullom Voe fitted quite neatly with the decline in demand from the old fields. Two of the old Brent tanks will be converted for the thicker Clair crude in addition to the two existing Clair tanks.
Mr Boswell said that work and other modifications would be done over the next couple of years. “We’re investigating that. It won’t be a major project but there will be some activity to make sure we are fully equipped to manage the additional throughput.”
BP currently employs over 200 people at the terminal and there can be up to 300 contractors’ employees on site. He did not envisage any new permanent jobs but the new business helped sustain existing jobs for the long term.
At one time the oil industry had predicted the terminal would shut around 2000 due to dwindling North Sea production. But rather than dwell on how inaccurate that turned out to be Mr Cluness praised the oil companies for keeping the North Sea industry going and pioneering difficult new finds in the west, despite fears about the dangers of deep water drilling.
He said: “You have to pay tribute to these oil companies for what they’ve achieved over 30 or 40 years. We’ve survived pretty well and one hopes that their safety schemes are well in place.”
Council development chairman Alastair Cooper, who is also vice-chairman of the harbour board, said Clair Ridge would bring substantial benefits for Sullom Voe, including securing the jobs that are there.
However, he warned it would be cancelled out if the Schiehallion contract is lost once the new production ship is bedded in in 2016. He said: “Effectively Clair Phase Two would just amount to what Schiehallion was bringing in at 120,000 barrels a day so it would keep us on a plateau. The best would be if it brought in another 120,000 barrels and we keep Schiehallion long term – that would be good news.”
Mr Boswell said the terminal would have to work to win that business for the long term. “It will obviously be something we will be seeking to pursue,” he said.
BP has only committed to continue sending oil to Sullom Voe from its new production ship for an initial period, although BP North Sea regional president Trevor Garlick expected “40 or so” shuttle tanker cargoes when he visited Shetland in August.
Mr Cooper also has concerns about what will happen to the terminal once east of Shetland oil has dwindled further with many of its oil company owners having little interest in west of Shetland activity. “The Sullom Voe Terminal could see change I suspect in maybe another 10 or 15 years’ time.”
The Clair Ridge project is the biggest component of a £10 billion investment plan for four new oil and gas projects announced today by BP and its partners following the granting of government approval.
The others are the previously announced £3 billion Schiehallion and Loyal redevelopment west of Shetland to cure its problems and the Devenick and Kinnoull fields in the central North Sea sector.
BP group chief executive Bob Dudley gave a speech about the developments in Aberdeen followed by Prime Minister David Cameron.
Mr Dudley called it a significant day in the history of the North Sea. He said BP now saw the potential to maintain its current production levels in the sector until 2030. Ultimately it hopes to extract a further three billion barrels of oil and gas equivalent after having taken about five billion so far.
The Prime Minister said the investment was “great news” and showed the confidence that there is to invest in the North Sea.
As reported by The Shetland Times 18 months ago the two new Clair Ridge platforms will be linked by a bridge. One will house drilling and production and the other the workers’ accommodation. They are to be put in place in 2015 with oil expected to flow in 2016. A four-mile pipeline will be laid to feed into the existing Clair pipe to Sullom Voe.
BP said Clair Ridge had an estimated 640 million barrels of oil to tap. It will become the hub for further expansion if the oil company so desires. The entire Clair field has about seven billion barrels of oil but its complexities mean it may not all be recovered.
Mr Garlick said Clair was a high-quality asset with a strong future. “With our co-venturers we are taking significant steps to maximise its potential,” he said.
The other main participants are ConocoPhillips, Chevron, Enterprise Oil and Shell.
Clair is the first and only fixed oil platform west of Shetland so far. The field was discovered in 1977 but its heavy oil meant it was only exploited this century. The first oil flowed into Sullom Voe in 2005, followed by 80 million barrels so far. Mr Boswell said it was quite a difficult field but was slowly being unlocked.