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Tuesday, 19 June, 2001, 15:33 GMT 16:33 UK
New boom oils island economy
Aerial view of Sullom Voe terminal
Sullom Voe: Europe's biggest oil and gas terminal

By Rob Pittam, of BBC Two's Working Lunch, in Shetland

The oil industry in Shetland is hoping new discoveries could lead to a rekindling of the boom time in the 1980s.

It is home to Sullom Voe, the biggest oil and gas terminal in Europe, owned by a consortium including BP Amoco and Shell.

The terminal handles about 600,000 barrels of oil a day, although that total is well down on from its peak.

However, new projects are raising hopes that the remote Scottish islands could increase their share of the market.

New projects

The Magnus Enhanced Oil Recovery scheme is one such venture.

Magnus field
Gas will be pumped to the Magnus field
Under the programme, gas piped in from Atlantic fields will be pumped out to the Magnus field in the North Sea, where it will be used to force oil out from under the seabed.

Then there are recent discoveries of oil in Atlantic fields to the west of Shetland.

And drilling is due to start next month in Faroese waters after four consortia won first round exploration licences.

The Faroe Islands had talked about building a terminal, but it is now thought the oil could instead be shipped to Sullom Voe.

Ambitions

Sullom Voe's terminal manager, Gordon Grant, talked of ambitions to take the terminal's throughput volume back above one million barrels of oil a day.

Gordon Grant, terminal manager, Sullom Voe
Gordon Grant: hopeful of activity boost
"It will take some work and some time," he said.

At its peak, Sullom Voe, built 20 years ago, was handling about 1.4 million barrels of oil a day.

"We are half that now," Mr Grant said.

"We are hopeful that as we see the decline in the east of Shetland basin we will see some new exploration activity, finding oil to the west of Shetland, and it would be our ambition to capture that oil for Sullom Voe."

Economic importance

Competition for contracts can be fierce.

Orkney's Flotta terminal is often in contention with Sullom Voe, which BP operates on behalf of a number of oil companies.

But winning a big contract can be vital in securing the life of a terminal.

And, with oil making up about 20% of the local economy, what is good for Sullom Voe is good for the islands as a whole.

"The terminal and the port activity generate around �100m a year turnover, and we estimate that about two-thirds of that goes back somehow into the Shetland economy," Mr Grant said.

"We have around 300 permanent BP staff on site and in a normal year, something like 300 contractors, so we do produce a lot of employment on the island.

"This year we also have a major overhaul and we have something like 1,500 people working on the terminal over the summer."

Competition for beds

It is unlikely Shetland will ever see another invasion on the scale of that in the late 1970s, when 7,000 workers arrived to build Sullom Voe, then the world's largest construction project.

Profile - Sullom Voe
Europe's biggest oil and gas terminal
Processes 600,000 barrels of oil every day
700 tankers used facilities at its peak, in 1986
Covers 1,000 acres
Employs 1,500 workers
Was world's largest construction site when built, by 7,000 workers
But even the 700 or so people on the islands for the maintenance work, and the 70 brought in for the Magnus project, are causing a headache for tourism chiefs.

Rooms are at a premium, and a giant accommodation module has been moored in the capital, Lerwick, to ease the pressure on hotels.

But holidaymakers can still find it hard to get a place to stay.

"The difficulty is it all happens at the same time," said Maurice Mullay, chief executive of the Shetland Tourist Board.

"It would be wonderful if they could carry out their maintenance out of peak season but they need the good weather to do it."

But he accepts that business tourism is an important part of the mix and that the oil industry brings in its fair share.

Secure future?

A revitalised oil sector would be welcomed by those who feared Sullom Voe could have a limited lifespan.

Before the boom, Shetland Islands Council made sure there was a generous provision from the oil companies for when supplies - and jobs - dried up.

That money has been wisely invested and is now worth more than �700m - the equivalent of �30,000 for each of the islands' inhabitants.

Oil has brought other changes to Shetland.

"I lived just across from where the terminal was being built and when I put my light off at night when I was a boy it was total darkness," recalled John Robertson, a health and safety official at Sullom Voe.

"You do not need a torch any more. I always say I hope I am not here when they put out the lights at Sullom Voe."

"I hope it is another generation way, way down the line that has that experience to come."

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See also:

26 Oct 00 | Scotland
Drilling impact report ordered
23 Oct 00 | Scotland
High price fuels oil boom
05 Sep 00 | Scotland
Positive outlook for oil industry
18 Dec 00 | Business
Norway plots oil sell-off
18 Dec 00 | Business
Oil projects jobs boost
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