Start-up from the £3.5billion Laggan-Tormore gas development west of Shetland paves the way for £690million of investment in the area over the next 10 years.
French oil and gas giant Total gave the beleaguered North Sea industry a huge boost yesterday when it said gas was finally flowing in the much-delayed project.
The milestone, which the Press and Journal’s Energy Voice website revealed was imminent just a few weeks ago, sees Total become the UK’s biggest oil and gas producer in terms of market share – but not for long.
Shell’s £47billion mega-merger with BG Group, due for completion next week, will see the enlarged group leap-frog Total into first place.
Total, which is operator in Laggan-Tormore and has a 60% stake, has faced a rocky road to getting the project on stream.
Delays in building a new gas plant for the development, industrial action, cost over-runs and challenging deepwater conditions all conspired to push back production.
Laggan-Tormore is expected to produce 90,000 barrels of oil equivalent per day, or about 8% of the UK’s total gas requirement – enough to heat 2million homes.
Last year, Total reduced its interest in the assets by selling 20% to SSE Exploration and Production (E&P) UK in a £565million deal. Dong E&P (UK) holds the other 20%.
Asked about the operator’s commitment to the area last night, a spokesman for Total said: “Total retained the operatorship and a 60% stake.
“Before the sale, Total held an 80% stake, larger than it had initially planned due to the withdrawal of one partner.
“It was always our intention to reduce its holding but retain a majority stake and operatorship in this core strategic hub.
“Total and its partners will invest £690million in opex (operational expenditure) over the next 10 years west of Shetland. Laggan-Tormore is a strategic hub for Total and central to our plans for operating in the UK.”
The fields are connected via a subsea pipeline to the new Shetland gas plant, with further export of processed gas to the Total-operated Frigg pipeline system and on to the St Fergus terminal, near Peterhead.
Energy Secretary Amber Rudd said Laggan-Tormore’s start-up was a “vote of confidence in our plan to tackle the legacy of under-investment and build an energy infrastructure fit for the 21st century”.
Scottish Energy Minister Fergus Ewing said: “It is the success of large investment projects such as this which will see the Shetland islands remain a key hub for oil and gas production in the North Sea.”
And Deirdre Michie, chief executive of industry body Oil and Gas UK, said it was “very welcome news at a challenging time for the UK oil and gas industry as a whole”.
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