Shetland is in line to become an international hub for decommissioning work as concerns emerge over the health of the wider North Sea fossil-fuel industry.
The remote islands are saying they could become an industrial powerhouse after being named the best site in the UK for massive decommissioning projects.
A report by the Oil and Gas UK trade body has suggested that exploratory drilling on the UK continental shelf this year could be at its lowest level for more than 50 years.
The restructuring efforts of many oil firms to survive the most recent production downturn has led to concerns about their ability to cope if activity improves.
Dales Voe at Lerwick (pictured) in Shetland was picked as an ultra-deepwater port, after a feasibility study across the UK by accountancy firm Ernst and Young. Almost £12 million has already been spent upgrading the port.
Operated by Lerwick Port Authority, Dales Voe has been extended to allow former oil rigs to be moved for dismantling.
Infrastructure is already in place in Norway and, according to the Oil and Gas Authority (OGA), upgrading the Lerwick port could generate up to £2 million per year for the UK economy.
Additional investment would open up the possibility of Scotland winning larger-scale decommissioning work, including the dismantling of the sector’s largest pieces of equipment.
Industry leaders met in Shetland for a summit this week with Energy Minister Paul Wheelhouse saying the news could “unlock the potential” for companies across the supply chain.
The Scottish minister said: “I believe investment in a deep-water port will unlock the potential for Scotland to secure the largest decommissioning contracts that require the largest heavy lift vessels currently in operation in the North Sea.
“A deep-water port in Scotland will bring significant benefits not only for a single location but as a key part of an integrated and networked Scotland-wide decommissioning offering, with wider opportunities realised through the supply chain.”
Billions are expected to be spent in the North Sea waters over the next 20 years, plugging and abandoning wells and removing oilfield pipelines and structures. Oil fields elsewhere will also need decommissioning expertise in future.
Gunther Newcombe, operations chief at the OGA, said Shetland could become a “centre of expertise” in the process.
Sandra Laurenson, the chief executive of Lerwick Port Authority, said it would give Shetland stronger capability to compete for international contracts.
Industry bodies and the Scottish government in Edinburgh are expected to work on plans to finance the development.
Lerwick in Shetland. Picture credit: Flickr
