Opinion: West of the Hebrides oil & gas industry pipe dream

Shetland news
Shetland news
Opinion by Energy Voice

By and large, the UKCS oil & gas story has been one of success. However, this has not been the case in the waters west of the Scottish mainland and the Hebrides. Rather, it has been one of disappointment and, unlike bustling Shetland, somehow oddly remote from Aberdeen.

Scotland’s west coast has always had a slightly arms length relationship with the oil & industry – intimately involved at some levels but never the front line in terms of activity or economic impacts.

It was not always expected to remain that way. I remember, almost 40 years ago, attending explanatory meetings in Stornoway and elsewhere at which oil industry executives talked confidently about the industry’s expansion to waters west of the Hebrides.

It was not a case of “if?” but “when?” which explains why that expectation has never quite gone away even though it has rarely seemed close to being fulfilled.

Over the years, there have been occasional bursts of activity with helicopters flying in and out of Stornoway or exploration vessels going quietly about their business.

DECC records show that there were 12 instances of exploration rigs drilling west of the Hebrides between 1980 and 2006 since which time activity appears to have faded. The British National Oil Corporation was first to have a go followed by BP, Britoil and half a dozen others including Marathon and Conoco.

During the Referendum campaign, there was a rash of conspiracy theories about how the wicked mandarins of Whitehall were trying to keep the lid on news of massive oil & gas discoveries off Scotland’s west coast. The exact opposite has actually been closer to the reality.

Government has repeatedly tried to promote interest among the oil companies in carrying out more exploration west of the Hebrides in the belief that the geology favours the likelihood of a whole new frontier for the future. The scepticism has tended to come from the industry itself, even in more favourable economic times.

Somewhere, there must be an awful lot of seismic data about the Rockall Trough and other areas of our western waters which have been surveyed over the decades. One day, something might happen but the current trends in the price of oil confirm that it is even more unlikely than it was 40 years ago, to happen anytime soon.

The closest the west coast came to having a real, live discovery was called Benbecula, 120 miles north-west of the Isle of Lewis. This actually became a real possibility during my watch as an energy minister and I did what I could to encourage the then operating licensee, Enterprise Oil, to pursue the option to its limits.

In 2000, it found gas, but eventually concluded that the discovery was not on a sufficient scale to be viable and sold out to Shell, which returned to the fray in 2006 in the hope that it might provide a Scottish equivalent to Ireland’s Corrib field. Again, nothing came of it.

In a presentation in December 2013, the excellent Simon Toole – who I am pleased to see has been appointed head of licensing in the new Oil & Gas Authority – tried again to promote interest in west of the Hebrides. There was an industry perception, he said, that much of the area was “unprospectable” but the Benbecula field demonstrated “a working petroleum system”.

The Rockall Trough was top of his list of “under-explored frontier regions” which offered opportunities to those who dared.

The problem, of course, is that it is not enough to discover oil or, in this case, gas. There also has to be a plausible route for getting it ashore at a credible cost. And “west of the Hebrides” is, by any standard, a tough frontier.

Needless to say, incidentally, the Benbecula field is nowhere near Benbecula. It is one of life’s minor annoyances that the oil industry keeps doing this – attaching geographical names which
may seem relevant or romantic when someone is looking at a map in Houston but are only confusing for those of us who live here and possibly misleading for those who think there is an offshore industry in North Uist or Benbecula!

The west coast’s highest profile encounter with the North Sea industry came through the short-lived boom years of platform building in the 1970s and ‘80s. This was a period of mass employment which proved, for anyone who still doubted, that the Highlands and Islands could sustain heavy industry with huge economic benefits flowing from large-scale employment.

Few now would dissent from the view that the era of Kishorn and Arnish were boom years for parts of Scotland which have been plagued for generations with an outflow of population for lack of work. Of course there were problems and challenges. But these were outweighed by the advantages of well-paid, blue collar employment in peripheral communities.

The problem was that it was all too short-lived and ill-planned. For a crazy period in the 1970s, every construction company in the UK was looking for a deep water site around Scotland’s west coast. If they could gain planning consent for a site and then secure an order, they were in the money. The result, inevitably, was too many sites for too few orders.

I reported what was, in 1973, the longest-ever event of its kind in Scottish legal history – the Drumbuie inquiry into plans by a consortium of Mowlem and Taylor Woodrow to build concrete oil platforms at a site next to the tiny crofting village on the shores of Loch Carron.

The top legal brains in Scotland – who went on to become the Lords Ross, McCluskey and Clyde – sifted through the arguments in the unlikely setting of Balmacara Hotel.

While this epic was going on, another consortium – Howard Doris – nicked in the back door with an application for the much less controversial Kishorn site.

There was an almost palpable sigh of relief in Government circles as a compromise solution presented itself – approve Kishorn and reject Drumbuie, where the reluctant landlords were the National Trust for Scotland.

Kishorn had an on and off existence for about a decade employing a couple of thousand people at its peak. There was a similar story on Lewis where the Arnish yard was leased by Stornoway Trust first to Fred Olsen and then Heerema. It continues to operate at a very low level but hope springs eternal that the glory days will return.

There were other yards including Hunterston, Clydebank and Portavadie – the latter never built a single platform before being mothballed. The belief that concrete platforms were the thing of the future soon passed and advances in technology made these yards pretty much redundant. But one result was that remote west coast communities had been given the smell of oil-related employment and wages to match.

And that contributed to the west coast’s other major role in the North Sea industry – as a supplier of labour. With decently-paid work on their own doorsteps perennially scarce, working men from West Highlands and Islands communities have increasingly thought of “offshore” as the best alternative. The results for many have been to deliver standards of living which no waged employment closer to home could have offered.

The inevitable corollary to that, however, has been a contribution to the steady outflow of population from which the periphery continues to suffer.

First there was the drift to Inverness and the Cromarty Firth in the boom days of Nigg and Ardersier. Then, when they stopped building platforms in these places, the alternative was via Aberdeen and work in the North Sea itself and onwards into the global offshore industry. “Offshore” became for a generation what the Merchant Navy had been to their forebears.

In this respect, the economic significance of the North Sea industry to the West Highlands and Islands continues to be enormous. While many have eventually moved with their families to be closer to where work exists, others have found it possible to stay in crofting communities on the “three on, three off” basis. They retain and often build their homes in the west even if their work is in the east – or much, much further afield.

For that reason, the current downturn in the industry is proportionately of as much concern to the west coast as to anywhere else. Already, the downturn is being felt and there is precious little work closer to home which can offer an alternative.

The “dream ticket” would still be a west coast oil and gas industry which created local employment and created a better economic balance within Scotland.

It now seems a more distant prospect than ever at least in the short to medium term. And in the oil industry, the “long term” can mean just about anything – as the west coast experience of the past 40 years has confirmed.