Ship-to-ship oil transfers a financial boon for local authority’s coffers

Unexpected business from ship-to-ship (StS) oil transfers at Sullom Voe is helping the council fill the million pound hole in its ports budget caused by the shutdown of BP’s Schiehallion oilfield, which has now dragged on for eight months.

Contrary to reports elsewhere in the local media, the Schiehallion field has not restarted production yet and the latest estimate from BP is for it to resume around the middle or end of February.

In the meantime a recent sales push by ports and harbours staff to find new business has brought five visits by tankers from Russia in the space of two months to offload oil to other tankers. In the previous 10 months there had been just one StS operation in the port.

Head of port operations Roger Moore revealed on Wednesday that the five StS operations had earned the council £135,000 in dues whereas it had not expected to earn anything from the practice this year. The charge is 49p per tonne of oil, which includes the cost of tugs and marine pilots.

Captain Moore told the SIC harbour board he was hopeful of further business as a result of meetings he has had in London, including the possibility that a company in Southwold which is involved in StS operations might move its operations from south-east England to Shetland or Orkney in the future. He said any new business for Sullom Voe was to be welcomed and he will pursue the matter again in the next few months.

Board chairman Alastair Cooper said: “I think we do need to go and knock on doors. Lord knows, we need the income.”

The loss of Schiehallion tanker traffic is crippling the entire council’s budget for 2009/10, with a loss of earnings of £1 million in nine months due to the lack of tankers to handle at the port. The upside is that having tugs and pilot boats lying idle has saved £200,000 in fuel and maintenance.

Schiehallion can account for about 40 per cent of the tanker traffic through Sullom Voe when the field is working properly. Before it shut down in May it was generating six to eight tanker visits a month for the terminal.

The council also lost out on income last year due to earlier problems with Schiehallion.

The Schiehallion floating production ship was due to come on line again last October but its shuttle tanker Loch Rannoch smashed into it, damaging the oil loading hose. BP has been working on adaptions, including the manufacture and fitting of a different connection point on the floating production ship.

The accident was blamed on faulty satellite positioning equipment on the tanker which failed to bring the ship to a halt close behind the floating platform.

During the shutdown the Loch Rannoch did some other charter work for a while but has spent most of the time tied up at jetty three at Sullom, nipping out to Schiehallion recently with water.

While there is some relief that StS is helping plug the gap this year, it cannot be depended on, Mr Moore said. The Russians only come to transfer oil when the winter ice requires an ice-breaking tanker to take the oil out for onward export by ordinary tankers. That stops in the spring.

The ongoing attempts to tout for new business have seen increased use of Sullom Voe for crew changes and other missions by vessels operating to the west of Shetland.

Meanwhile, bumper whitefish landings over the council piers at Cullivoe and Scalloway are also helping fill the £1m hole in income, having brought in £100,000 more than expected so far this financial year.