News / 45 more years of Sullom Voe oil
OIL GIANT BP yesterday (Wednesday) re-affirmed its commitment to the west of Shetland oil province with billions of pounds of investments in the pipeline for the next five years.
Both, the Clair Ridge development (phase two of the Clair oil field) and the project to secure the long term future of Schiehallion (Q204 in oil industry jargon) will go ahead as of 2015, with crucial investment decisions being taken in 2011 and 2012.
The commitment will help to secure the long term future of the Sullom Voe oil terminal, which provides hundreds of jobs to the local community.
However Shetland Islands Council’s harbour board chairman Alastair Cooper said it was not clear if Schiehallion oil would continue to boost oil throughput at Sullom Voe.
On Tuesday, BP hosted a meeting with potential investors in London and gave a strategy update to the financial community.
Yesterday (Wednesday) a spokesman for BP in Aberdeen gave further details saying that the life of Schiehallion could extend beyond 2035, while the Clair Ridge development had a 40 year life design.
The spokesman said phase two of the Clair development, with an estimated production of 120,000 barrels a day until at least 2055, would be “significant larger” than the present operation.
Phase one started production in March 2005 when the first oil was pumped into Sullom Voe via a large new pipeline.
Further work on Schiehallion, 110 miles to the west of Shetland, will open up between 150 million and 250 million barrels of oil.
The spokesman said: “We are looking at different design options, including a brand new floating vessel. If we were to sustain oil production at Schiehallion in the long term we would have to do something differently towards what we currently have.
“Schiehallion has been producing since 1998, but our long term plans are for more production and for a longer period.
“We are looking at three or four options of how to do that, and we are currently targeting the first quarter of next year for the project to be sanctioned.”
He added: “The plan for Clair Ridge is a bridge linked twin steel jacket development with the drilling and production facilities on one platform and the quarters and utilities on the other.
“The estimated capital cost is going to be $6 billion gross (£4 billion). This is really a big project and that is why it was in the strategy presentation.”
Mr Cooper said the update from BP was good news on the one hand but also posed a challenge as it was unclear whether oil from Schiehallion would continue to be taken to the terminal by the shuttle tanker Loch Rannoch.
“The original deal with Clair was to deliver it in three phases. We have to be thankful to the tax concession the government gave to the oil industry, as I think it has brought forward the Clair phase two.
“It helps guarantee continuity at the Sullom Voe oil terminal. When the development of Clair was agreed the assumption was that all three phases of Clair would come to Sullom Voe, and I believe that is still the case.”
He added: “Schiehallion may not be so good news, because I suspect BP will be looking at a larger vessel that has the capacity to store sufficient oil to take it directly to the European market, as it is being done with Foinaven.
“The challenge for us and the Sullom Voe terminal is to offer a low enough unit cost for harbour operations to ensure Schiehallion keeps coming into the port of Sullom Voe.”
A spokesperson for Sullom Voe welcomed BP’s commitment but said it was too early to say that oil from Clair 2 would be pumped to the terminal.
She added the terminal would position itself in a bid to win some of the future business.
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