Shetland to bid for share of global oil-rig break-up work – thanks to £20m Scot-Govt grant

 

Oil rig decommissioining
Oil rig decommissioining

Shetland is set to become a global leader in the multi-billion pound global oil and gas decommissioning industry as a result of a £20 million of investment announced by Scottish Finance Minister John Swinney.

A set of multi-million pound investments by Lerwick Port Authority and international energy logistics company Peterson will create a decommissioning centre of excellence around the Northern Isles’ harbour.

The growing oil and gas decommissioning industry has a current market value of between £30 billion and £40 billion in the North Sea. Scrapping oil rigs – like breaking-up ships – is a potentially lucrative business. It is also potentially hazardous and labour-intensive.

Lerwick Port Authority (LPA) is undertaking a £11.95m quayside infrastructure project at Dales Voe South in order to support the development of oil and gas decommissioning in Shetland. The expansion will support around 120 permanent island jobs.

In addition, Peterson (United Kingdom) Ltd is proposing investments up to £8.64m in its ‘Deep Water Shetland’ project to further support and expand its existing decommissioning capability. Working jointly with its partners in decommissioning, Veolia, the project could create around 67 high value jobs and add around £10m to the local economy.

These two strategic investments announced today will secure Shetland’s place as a globally-significant decommissioning centre of excellence, in support of a hugely successful oil and gas supply chain in Scotland. The facility will be the only one of its kind in Scotland, placing Shetland at the international forefront of an emerging sector which promises many more decades of lucrative activity for the industry.

Peterson has also been awarded £1.1m of Regional Selective Assistance (RSA), from by Scottish Enterprise. As a result, 67 new jobs are to be created at the company as part of the 120 jobs supported by both projects.

Swinney said: “Decommissioning North Sea assets presents a huge opportunity for the Scottish oil and gas supply chain. The Scottish Government is committed to working with the industry to mobilise investment by the oil and gas supply chain to ensure that the Total Value Added from decommissioning expenditure is optimised, generating both jobs and growth for the Scottish economy.

“Scottish companies have a world class reputation for innovation in the oil and gas sector. Through developing products and processes for successful decommissioning we will strengthen Scotland’s strategic advantage and if managed successfully, the North Sea oil and gas industry has the potential to become a global leader in this sector.”

Sandra Laurenson, Lerwick Port Authority Chief Executive, commented: “The Dales Voe South development is in line with our strategy to meet the changing requirements of port users and expand Shetland’s resources. Almost trebling the quay to 130 metres, its design, length and strength will future-proof the deep water port for handling a wide range of opportunities and contractors.

“The load-bearing capacity of 60 tonnes per square metre will make the extension unique in Scotland and be another major selling point for Lerwick when available in 2016.

“Peterson’s plans will also mean another significant addition to the port’s decommissioning capabilities and to the benefits to Shetland.”

Murdo MacIver, Director, Peterson Offshore Group, added: “This support shall secure and enhance Shetland’s position to become a leading hub for decommissioning works in the Northern North Sea. The investment Peterson has made in facilities and capabilities in Shetland is part of a wider growth strategy where the decommissioning market is a particular focus.

“Along with our partner Veolia, we already have valuable experience in the completion of a number of decommissioning projects and we believe this experience, matched with greater facilities will earn Shetland the position as a world leader.”

 

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed