Millions invested as Shetland bids to become decommissioning hub

Investments totalling £20 million will be announced today as Shetland bids to become a global leader in the multi-billion pound decommissioning industry – creating scores of skilled jobs.

The multi-million pound investments by Lerwick Port Authority and international energy logistics company Peterson aims to create a decommissioning “centre of excellence” in Lerwick.

Lerwick Port Authority (LPA) is undertaking a £11.95m quayside infrastructure project at Dales Voe South in order to support the development of oil and gas decommissioning. The expansion will support around 120 permanent jobs locally.

In addition, Peterson (United Kingdom) Ltd is proposing investments up to £8.64m in its “Deep Water Shetland” project to further support and expand its existing decommissioning capability. Working jointly with its partners in decommissioning, Veolia, the project could create around 67 high value jobs. It is predicted that the investment could boost the local economy by as much as £10 million.

Both projects are being supported by the Scottish government and economic development agency Highlands and Islands Enterprise (HIE). The announcement marks the culmination of years of painstaking work.

The growing oil and gas decommissioning industry has a current market value of between £30 billion and £40 billion in the North Sea.

These two strategic investments announced today will secure Shetland’s place as a globally-significant decommissioning centre of excellence, in support of a hugely successful oil and gas supply chain in Scotland, said cabinet secretary John Swinney. The facility will be the only one of its kind in Scotland, placing Shetland at the forefront of an emerging sector which promises many more decades of lucrative activity for the industry.

HIE has approved £628,000 to Peterson and a further £1,195,000 to Lerwick Port Authority, including £324,416 through the European Regional Development Fund (ERDF).

The port authority has also been awarded £1.2m from the Scottish government while Peterson has also been awarded £1.1m of Regional Selective Assistance (RSA), from Scottish Enterprise.

As a result, 67 new jobs are to be created at the company as part of the 120 jobs supported by both projects.

Announcing the investment, Mr Swinney said: “As recently highlighted by Scotland’s independent Expert Commission on Oil and Gas, the decommissioning of North Sea assets presents a huge opportunity for the Scottish oil and gas supply chain.

“The Scottish government is committed to working with the industry to mobilise investment by the oil and gas supply chain to ensure that the Total Value Added from decommissioning expenditure is optimised, generating both jobs and growth for the Scottish economy.

“Scottish companies have a world class reputation for innovation in the oil and gas sector. Through developing products and processes for successful decommissioning we will strengthen Scotland’s strategic advantage and if managed successfully, the North Sea oil and gas industry has the potential to become a global leader in this sector.

“The Scottish government is committed to investing in the necessary infrastructure to support decommissioning activity in Scotland, this is demonstrated through the public support provided to these two projects of strategic importance, enabling Scotland to compete with Norway in winning contracts for lucrative decommissioning work.

“The skills and experience gained through decommissioning projects in the North Sea will result in increased demand for these services internationally for decades to come. This will offer a huge opportunity for Scottish-based supply chain companies to build on their existing success worldwide – now operating in over 100 countries and having achieved £10 billion in international sales in 2012.

LPA chief executive Sandra Laurenson said the Dales Voe South development was in line with the authroity’s strategy to meet the changing requirements of port users and “expand Shetland’s resources”.

“Almost trebling the quay to 130 metres, its design, length and strength will future-proof the deep water port for handling a wide range of opportunities and contractors.

“The load-bearing capacity of 60 tonnes per square metre will make the extension unique in Scotland and be another major selling point for Lerwick when available in 2016.

“Peterson’s plans will also mean another significant addition to the port’s decommissioning capabilities and to the benefits to Shetland.”

Board director of Peterson Offshore Group, Murdo MacIver, said: “This support shall secure and enhance Shetland’s position to become a leading hub for decommissioning works in the northern North Sea.

“The investment Peterson has made in facilities and capabilities in Shetland is part of a wider growth strategy where the decommissioning market is a particular focus.

“Along with our partner Veolia, we already have valuable experience in the completion of a number of decommissioning projects and we believe this experience, matched with greater facilities will earn Shetland the position as a world leader.”

Head of regional development at HIE, Katrina Wiseman said: “HIE has supported both Lerwick Port Authority and Peterson over a number of years as each has invested in Shetland and increased decommissioning activities.

“The development of a centre of excellence for decommissioning is hugely significant for Shetland, and will sustain the leading role the islands have played in North Sea oil and gas from the very beginning.

“Peterson already has a firm reputation in this fast-growing industry from the Greenhead Base and its investment, coupled with the expansion at Lerwick Harbour, will position Scotland as a leader in the international decommissioning market.

“By enabling Peterson to bid for contracts that may otherwise go elsewhere this project will not only be of huge benefit to the local economy but to the industry supply chain across Scotland.”