Energy / Council a key partner in energy transition but no guarantee that business ventures will succeed
INCOME from exporting oil through Sullom Voe will be a crucial component in making Sella Ness fit for the energy transition of future years.
While the direction of travel is “pretty clear” according to John Smith, the council’s director of infrastructure, the finer detail of that decarbonisation journey is “still pretty uncertain”.
Smith spoke to Shetland News a day after councillors adopted an ambitious set of policies for community benefit negotiations with energy companies.
Issuing a word of caution, he said that it was in no way clear if carbon capture and storage (CCS) would work or if the production of green fuels from offshore wind would ever be commercially viable in the local context.
“It is not clear if something like carbon capture or hydrogen production at this stage has anything like a business case,” Smith said.
“We [the SIC] keep an option of shared ownership, but these seem to be high risk ventures at this stage, unless you get them completely underwritten by national government.”
Meanwhile, councillors are understood to have instructed officials to negotiate community benefit for Statkraft’s projected hydrogen plant on SIC-owned land at Scatsta largely based on the policy principles agreed in the public session of the same council meeting on Monday.
Smith described the role of Shetland Islands Council as a “constructive partner” in an energy transition that was inevitably going to happen, with the islands’ port infrastructure and local skills playing a key factor.
However, there are limits “to the influence that we have”, he said, adding that the parameters in the energy business were set by national government while describing some of the potential business ventures as “high risk”.
“Our ambition is that we would bridge from an oil and gas energy hub to a new energy hub without a collapse in the middle where all the infrastructure and all the skills disappears,” he said of the size of the task.
“We are a constructive partner in this, but a lot depends on national government and industry to move it forward as commercially viable options to pursue these things in Shetland rather than elsewhere.”
As such investments will have to made into port infrastructure to allow tankers filled with carbon to discharge their cargo into a redesigned pipeline system.
“[The port] certainly requires it to be sustained,” he said. “There is no doubt that the topsides of the jetties will have to be adapted, but whether the fundamentals need to be dramatically different is a matter of a joint study.
“Certainly, there will have to be some investment and that will have to be factored in as cost.
“We have the hope – and we are working hard on that side – that the fundamentals of the port will continue to provide an important income stream with oil from Clair having a multi-decade life to continue, while transition adds other business with the basic infrastructure in place.”
Smith added: “Most of the equipment and skill are already there. That should give us an advantage compared to others who have to start from scratch.”
So, Shetland and the council-owned port of Sullom Voe is well placed to benefit from the energy transition – but how and over what timespan it will all happen is not certain.
“This is a long haul, there will be dead ends and false starts, but hopefully some genuine progress is possible,” he said.
Should progress be made, however, Smith is confident that there could be a possibility for Shetland to receive a “product benefit” in the form of affordable energy.
“That would be a tangible community benefit, but it is going to be tricky”, he said.
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