Pete Bevington

13 March, 2010

A MULTI million pound deal could be signed in Shetland next week by UK energy minister Lord Hunt and representatives of French oil and gas giant Total to herald the dawn of a new age for the country’s energy industry.

Shetland Islands Council (SIC) meets privately on Tuesday to discuss the final details of a settlement with Total to bring ashore the first gas from the new fields being discovered in the north Atlantic, west of the isles.

Councillors hope the company will sign a 30 year lease on land to build its £500 million gas processing plant next to Europe’s largest oil exporting terminal at Sullom Voe.

The SIC are believed to be looking for a small royalty on all the gas that flows through the islands from the Laggan/Tormore field before it travels via the Frigg pipeline to St Fergus.

Such a deal would be similar to the disturbance agreement signed with the oil industry when Sullom Voe was built in the 1970s, which paid the council one penny on every tonne of oil that passed through the terminal until 2000.

If negotiations can be finalised on Tuesday then Lord Hunt could be in Shetland as early as next Thursday to sign Total’s field development plan, two weeks earlier than initially expected.

Last month the SIC’s planning board gave Total permission to erect the processing plant together with import and export pipelines, isolation valves, associated roads and hard standing on land at Sullom Voe, Orca Voe and Firths Voe.

The development will see the removal of 350,000 tonnes of peat, which will be stored in “reservoirs” for the 30 year lifespan of the plant.

The council is keen to replenish its dwindling oil reserves and minimise service cuts being forced on it by tough economic times. The company has refused a request for a stand alone community fund.

The government is also desperate for new sources of gas to help bolster the country’s energy security.

If an agreement can be signed this month, work on preparing the site will commence in April with production expected to start in June 2014 creating 60 to 70 full time jobs on top of the hundreds of men who will be employed during the construction phase.