One of the firms involved in exploiting North Sea gas reserves believes it has “cracked the code West of Shetland”.
Top personnel from Dong Energy were in the isles today for a visit to Shetland Gas Plant, which will process gas from the Laggan-Tormore fields.
The Danish company says its aim is to double its levels of exploration and production this decade and it believes there are enough reserves to go beyond the forecast 30-year life of the Laggan-Tormore project.
Dong is a 20 per cent partner in the project, which includes the gas processing plant, with Total holding the remaining 80 per cent. Together the oil firms want to exploit the Laggan and Tormore fields they believe represent the “future of the UK oil and gas industry”, on the edge of the UK continental shelf.
Engineers will have to contend with the “uniquely challenging” water depths of up to 600m, but iit there is great potential in the fields, 125km north-west of Shetland. The gas will be piped from LAggan and Tormore to the gas plant.
Dong Director Soren Gath Hansen said the project, the firm’s first in the UK, will be very important to the Shetland economy, but also to the broader UK economy. Between 17 to 20 per cent of the UK’s oil and gas resources are “locked” in the West of Shetland fields.
He said Dong is one of northern Europe’s leading energy companies, operating also in Faroe, Norway and Greenland, and one of the largest licence holders West of Shetland. It aims to double its exploration and production this decade. The Glenlivet gas field, which Dong owns the rights for, is set to be linked with the Laggan-Tormore pipeline.
There have been other “significant finds” in the area, and, he said: “We believe we have cracked the code West of Shetland.”
Dong UK chairman Brent Cheshire said Shetland Gas Plant (SGP) would “unlock” the “gas cluster” in this area, with Laggan-Tormore as a hub. He said: “It’s a very worthwhile area to operate in because of the materiality in the wells.”
Dong UK director of assets and facilities Simon Slater said of the SGP: “It’s strategically important to the energy mix of the UK and the future of Dong.” The “new frontiers” of wells to operate in the future would add to this.
He added: “Dong is seeking to double its exploration and production by 2020. Laggan-Tormore and SGP are key areas which will give us our first UK production in the near term, and in the long term be an enabler for the tie-back of existing discoveries. It’s a vital piece of infrastructure, it’s a challenging project but we’re very happy with the relationship with Total and with progress.”
Construction of the gas plant started in 2010 and is now 75 per cent complete. It is due to be finished on time, with the first gas flowing in the middle of next year.
The cost of the Laggan-Tormore project, including the SGP, stands at £3.3 billion. While that is significantly higher than the original estimated £2.5 billion it has not risen since April when reporters last toured the plant.
The project is estimated to have a 30-year lifespan, which could be extended as gas from other as yet undeveloped fields comes ashore. The workforce is now 1,300, and is due to peak at 1,400 shortly, with another accommodation flotel due to arrive this month.
Gas, together with light oil known as condensate, will be piped 143-km from Laggan-Tormore, at 600-metres the deepest wells in the UK, into the gas plant. The liquid condensate will be removed there and piped to BP for storage and eventual export. The natural gas will be exported to St Fergus, near Peterhead, for final processing before entering the national grid.