Shetland is bidding to become a global leader in a multi-billion pound industry as a result of over £20million of investment announced by Cabinet Secretary John Swinney.
A set of multi-million pound investments by Lerwick Port Authority and international energy logistics company Peterson aims to create a decommissioning centre of excellence around 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 in Shetland. The expansion will support around 120 permanent island jobs.
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 and add around £10m to the local economy.
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. The facility will be the only one of its kind in Scotland, placing Shetland at the international forefront of an emerging sector which promises many more decades of lucrative activity for the industry.
Both projects are supported by the Scottish Government and economic development agency Highlands and Islands Enterprise (HIE). 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). LPA has also been awarded £1.2m from the Scottish Government.
Peterson has also been awarded £1.1m of Regional Selective Assistance (RSA), from by 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 this investment, Cabinet Secretary for Finance, Employment and Sustainable Growth John 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.
Welcoming the financial support, Sandra Laurenson, Lerwick Port Authority Chief Executive, commented:
"The Dales Voe South development is in line with our 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."
Murdo MacIver Board Director of Peterson Offshore Group 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."
Katrina Wiseman, Head of Regional Development at HIE, 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."