Council to explore micro-refinery idea as oil hits $100 a barrel

A call has been made for Sullom Voe to have a micro-refinery which could help individuals and businesses in the isles at times of high oil prices.

The idea was put forward by councillor Jonathan Wills at a meeting of today’s infrastructure committee as the price of North Sea oil rose to US $100 a barrel.

Dr Wills spoke out after councillors heard the SIC was facing a £143,000 overspend on ferries because fuel costs had risen since the 2010/11 budget was set.

The idea of a refinery was first raised in 2009 by the council’s then chief executive David Clark. He said several companies were interested in such a project.

Dr Wills said the fact that oil came ashore at Sullom Voe before being sent down to Grangemouth, refined and shipped back up at great cost meant action had to be taken.

He said he had seen a similar project successfully operating in Alaska, which had helped provide aviation and marine fuel as well as fuel for road vehicles.

“I wanted to flag up an idea. The fuel we’re buying at great cost is coming up from Grangemouth,” he said. “This is what the market dictates, but it need not be so.

“In Alaska they have micro-refineries which produce small amounts of marine diesel and other fuel. Should we not be looking at this?”

He stressed he was not suggesting the council should invest in the project itself, adding it was a business opportunity for a private enterprise.

Infrastructure chairwoman Iris Hawkins said the idea should be put to the council’s development committee.

Brent Crude futures were changing hands at US $110.59 a barrel at lunchtime, with the same barrel costing marginally less – US $99.90 – on the spot market.

Market commentators said it had been pushed up by concerns about the growing instability in Egypt and how that might impact on oil supplies coming through the Suez Canal.