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News / BP push back new £500 million gas plant

The expansion of the Sullom Voe terminal site to incorporate a new gas sweetening plant is being postponed by six months due to the oil price crash. Photo BP

SULLOM Voe oil terminal operators BP have postponed construction of a £500 million gas sweetening plant for six months.

The decision was triggered by the sudden descent in the global price of oil, which has forced the multinational to reexamine its entire portfolio of capital projects.

However BP say the new start date for construction in early 2016 means the project can be completed faster, saving the company money in the process.

The gas sweetening plant, which was granted planning permission by Shetland Islands Council back in June last year, will remove hydrogen sulphide from “sour” gas piped in by Total from the west of Shetland to their new gas plant next door.

On Thursday BP confirmed that work clearing the 16 hectare site adjacent to the existing oil terminal, originally scheduled to begin in January, would start later this month.

However construction firm Petrofac will not start bringing in the 500 workers to build the actual plant, which includes a 55 metre high incinerating stack and a 70 metre flare stack, until early next year with a target to start operating in late 2017.

A BP spokeswoman said the company was examining all its capital projects after the price of oil crashed from over $100/barrel to less than $50, though it has subsequently risen to just above $60.

“We are not cancelling projects, but we are deferring and pushing back in some instances,” she said.

“SVGS (Sullom Voe gas sweetening) is not as mature as some of our other projects, so it is one of those we are looking to re-phase.

“But this helps us to reset the project to better weather windows. That will reduce the project time, which is beneficial and allows us to look at the project again to make sure it is as efficient as it can be.

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“Everyone is looking at the capital projects and seeing where we could benefit from slowing down.”

Other projects where they were already “cutting steel”, such as the £4.5 billion Clair Phase 2 project to unlock 640 million barrels of oil from the giant Clair field west of Eshaness, remain on schedule, she said.

Also the current £250 million refurbishment of the oil terminal at Sullom Voe to make it fit for the next 30 years is proceeding on schedule.

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