BP undecided on future of Schiehallion-Shetland link

BP said today it has not yet decided if the Sullom Voe Terminal will continue receiving oil from the Schiehallion field once a replacement production and storage ship goes into service in 2016.

A spokesman in Aberdeen said the shuttle tanker cargoes from the problem-hit west of Shetland field would go to the terminal “at start-up” in 2016 when production first comes back on stream. But no decision has been taken about exports in the long term.

The new 270-metre floating production, storage and offloading (FPSO) ship which has now been agreed for Schiehallion has been designed to process the oil onboard to separate off the high percentage of seawater – a task currently done in giant storage tanks at Sullom Voe.

Shetland Islands Council fears a shift to exporting straight from the production ship to market which would cost it millions of pounds a year in lost income for its tug and pilot boat operations.

During the times when Schiehallion has been able to reach full production levels in recent years it has provided around 40 per cent of the council’s revenues from Sullom Voe.

The council already suffers regular and prolonged dips in its expected revenue from Schiehallion when the field is taken out of service for repair work, usually lasting for months. It is out of action just now and its dedicated shuttle tanker Loch Rannoch left on Friday to go into drydock in Ferrol, Spain.

There will be no income from the field between the time when the existing 246-metre production ship is removed during 2014 and the new one is plumbed in, which is expected to mean a gap of around one-and-a-half years.

BP announced today that its co-venturers, including Shell, Hess and Statoil, had agreed to spend £3 billion redeveloping Schiehallion and its associated Loyal field in a project known as Quad 204.

BP addressed the problems of the existing Schiehallion systems last year in a scoping report for the Quad 204’s environmental impact assessment. It admitted: “In recent years operating challenges on the FPSO have resulted in a deterioration of the production operating efficiency and the existing vessel is unable to fulfil the processing requirements of the anticipated economic field life.

“Redevelopment of the surface production facilities, new wells and an expansion of subsea infrastructure is therefore required to access the remaining hydrocarbon resources.”

Alternatives to a new production ship were considered, including making do with the existing ship, taking it ashore for modifications, piping the oil to a new platform closer inshore or building a new fixed oil rig or semi-submersible platform at Schiehallion.

BP said Schiehallion and Loyal had produced nearly 400 million barrels since starting in 1998. It has reserves estimated to amount to another 450 million barrels which could keep the field going to 2035 and beyond.

The fields currently have 53 wells for extracting oil and gas and re-injecting water and BP expects a further 50 will require to be drilled with the first half being done over the next 10 years.

The new ship will be able to process and export up to 130,000 barrels a day of oil, and store in excess of one million barrels.

BP’s regional president for North Sea business Trevor Garlick said: “The Schiehallion and Loyal oil fields are established assets with a strong future and we and our co-venturers are taking some significant steps to maximise the greater potential we now see in these fields.”