Schiehallion field production will be suspended early next year, BP announces

BP and its partners have announced that the Schiehallion field will be out of action from early 2013, around a year earlier than had originally been planned.

Production from the field, which is a hugely important source of business for the Sullom Voe Terminal, will be suspended to prepare the seabed for new infrastructure to redevelop both Schiehallion and Loyal.

Although the expansion of the Clair oilfield to the west of Shetland should help keep the terminal going until the middle of this century, there are fears the islands will lose the Schiehallion contract altogether once a huge new production ship has bedded in around 2016.

BP and its “Quad 204” partners, including Shell, Hess and Statoil, first announced the project last July. It includes a new 270 metre-long vessel capable of processing and exporting up to 130,000 barrels of oil a day, with room to store more than one million barrels on board.

SIC harbour board vice-chairman Alastair Cooper said the council had been anticipating the Schiehallion situation and had planned accordingly, but the earlier shutdown will add to the local authority’s financial headache in the 2012/13 financial year.

“The council has known for over a year that production would cease at Schiehallion in 2013,” Mr Cooper said. “The decision to remove the vessel in February of that year, however, will have an impact … with a drop in vessel calls of around 20 per cent.

“That will affect the SIC’s ability to generate the £5 million surplus reported in our recent estimates exercise for that year. This is obviously disappointing, but we are looking in the medium and long term to retain the production of Schiehallion passing through the Sullom Voe Terminal.

“Further to that, phase two of the Clair development is expected to come online in 2016/17, and hopefully that will mark a very significant ramp in production, and subsequent throughput at the port of Sullom Voe.”

A joint statement from the Schiehallion partners issued today read: “In order to further improve the likelihood of first production from the new FPSO [floating production, storage and offloading vessel] in 2016, the existing FPSO will cease operations and be removed during 2013.

“This will provide more time to clear the seabed around the site of the existing FPSO for significant installation activities in 2014, in preparation for the new FPSO arriving in 2015.

“The main consequence of this decision will be minimal production in 2013. However, this will be partially offset by increased production in 2012 as some maintenance activity can now be removed from the 2012 work plans.”