Development plans for the Laggan and Tormore gas fields west of Shetland were hailed yesterday by Business Secretary Lord Mandelson as a “major win” for the islands, for Scotland and the UK”.
The £2.5billion scheme includes a new gas plant, which is expected to inject £200million into the islands’ economy over 30 years.
About 500 construction jobs are anticipated, with up to 70 permanent positions when production starts in 2014.
Mr Mandelson announced the completion of formalities for the project during a visit to Aberdeen, where he spoke at the Federation of Small Businesses (FSB) annual conference.
It emerged on Thursday that French energy giant Total, in partnership with Denmark’s Dong Energy, had finally struck a deal with Shetland councillors allowing work to start on the new processing plant at Sullom Voe.
The talks dragged on longer than expected before the two sides agreed on a land lease tied to the amount and price of gas that flows through the islands.
The Department for Energy and Climate Change had the final say on the field-development plans which were approved yesterday.
Total said earlier this week that the cost of bringing the fields, which have combined estimated reserves of 230million barrels of oil equivalent, into production would be about £2.5billion.
Laggan/Tormore will be connected via a subsea pipeline to a gas-processing plant at Sullom Voe, with further export of processed gas to the UK Frigg pipeline system in the North Sea and on to the St Fergus terminal.
The decision to go ahead with the project was heavily influenced by a recent tax change to support the development of remote, deepwater gas fields and an industry and government taskforce that was set up to examine the potential for new infrastructure in the area.
Lord Mandelson said the fields would support about 2,100 UK jobs during their lifetime.
He added: “It will be a major technical challenge developing the deepest gas fields to date on the UK continental shelf (UKCS).
“I congratulate everyone involved for their hard work and for bringing on stream this very ambitious and worthwhile project.”
Energy Minister Lord Hunt added: “This is a huge step forward for the wider development of the west-of-Shetland area, which still contains about one-fifth of the UK’s oil and gas reserves.”
Total Exploration and Production UK managing director Roland Festor said: “The decision to make this groundbreaking project happen underlines our ongoing commitment to pursuing our investments on the UKCS.”
The FSB conference continues today, with a programme including a political Question Time-style debate chaired by former BBC chief political correspondent John Sergeant.