OGA presents bold vision for Sullom Voe Terminal

Sullom Voe Terminal
Sullom Voe Terminal

The UK’s oil sector regulator has presented a bold vision of what the future might hold for a major terminal in Shetland.

Sullom Voe Terminal (SVT) could be transformed into “something completely different” over the next few decades, said Gunther Newcombe, operations director at the Oil and Gas Authority (OGA).

He described SVT as “pivotal” to Shetland and highlighted the importance of cutting operating costs and getting its capacity right.

The site boasts 1,000 acres of “prime industrial land” capable of hosting warehousing and fabrication space, wind turbines and a gas power plant, Mr Newcombe said.

Storage tanks and the existing power station could be removed to free up space as they become surplus to requirements.

The Sullom Voe inlet may also be used for more ship-to-ship oil transfers and tidal power generation.

SVT has been operated by EnQuest since last year, when it took over from BP.

Bob Davenport, EnQuest’s North Sea boss, said the firm was on track to reduce running costs by around 25% to £150 million this year, thanks to “efficient project delivery”.

Now in its 40th year of operation, SVT is one of Europe’s largest oil terminals, receiving production from a large number of fields east and west of Shetland.

SVT’s oil processing capacity is 410,000 barrels per day (bpd), but its current throughput rate is around 100,000 bpd on average, compared to 1.5 million in its mid-1980s heyday. 

Gunther Newcombe at the industry showcase event in Lerwick, Shetland, on September 10, 2018. Photo by Ben Mullay, Shetland.

Mr Newcombe’s observations about SVT were made during a presentation about the wider Shetland area’s future as a major oil and gas province.

His presentation illustrated how the different basins around Shetland can form part of a bigger picture.

West of Shetland is viewed as the North Sea’s most promising region, while there are hopes of a “northern area gas hub” coming to fruition.

Mr Newcombe said east Shetland still had an “awful lot of potential” and was the focus of high activity levels.

But he said industry had to produce more efficiently and lower decommissioning costs for that area, currently estimated at £9 billion.

Addressing a group of oil industry figures in Lerwick, Mr Newcombe said: “There are lots of different options, so it’s important not to lose your way.

“But when you are thinking about the future you cannot just think about one asset. You need to think about the entire region.

“That’s what the OGA is trying to do – give people food for thought.”

Mr Davenport said the OGA’s vision for the wider Shetland area was “ambitious” and would “stimulate discussion, debate and new ways of thinking”.