Scotland's Marine Atlas: Information for The National Marine Plan

OIL, GAS, PIPELINES AND GAS STORAGE

What, why and where?

Oil and gas exploration and exploitation has been a major activity in Scottish offshore waters since the late 1960s. Most oil and gas fields on the United Kingdom Continental Shelf ( UKCS) are located in the North Sea. Only the Beatrice Field in the Moray Firth is close to shore and within the 12 nautical mile Territorial Sea limit. The remainder are much further offshore, within the 200 nautical mile limit. Since 1977 there has also been activity to the area west of Shetland following the discovery of the Clair Field.

There is extensive infrastructure associated with these oil and gas developments including seabed and platform-mounted production facilities and networks of pipelines bringing oil and gas ashore for processing. The shore-side reception facilities include the gas terminal at St Fergus in Aberdeenshire and the Sullom Voe oil terminal in Shetland, the largest oil terminal in Europe. There are three interconnector pipelines in the south west which take gas across the Irish Sea. There is no gas storage activity in Scottish waters, currently.

Oil and gas are Scotland's principal sources of fuel and power. They met more than 58% of primary energy demand in 2008 and are forecast still to meet up to 70% in 2020. Oil and gas provided 21% of the energy required for Scotland's electricity generation in 2009 ⁽¹⁾. While oil and gas continue to make a significant contribution to electricity generation, the Scottish Government aims to meet 80% of electricity demand from renewable sources by 2020.

% contribution of oil and gas to primary energy demand in Scotland (2002 - 2020)

Source: Scottish Energy Study ⁽²⁾

Scottish oil and gas employment

No. jobs	Type
110,000	Activity on the UK Continental Shelf
45,000	Export of goods and services
41,000	Supported by the economic activity induced by employees' spending.

Source: Oil & Gas UK 2010 Economic Report ⁽⁵⁾

Producing platforms and pipeline lengths

Scottish sea area	Pipeline length (kms)	Number of platforms (2009)
Solway Firth, North Channel	91.75
Clyde	9.45
North Scotland Coast	150.79	2
West Shetland	1,565.86	8
East Shetland	3,087.22	32
Fladen	4,491.58	39
Moray Firth	84.61	3
East Scotland Coast	583.90
Forties	2,755.87	19
Forth	33.87
Total	12,804.83	103

Source: based on SeaZone and DEAL data

Aerial view of St Fergus terminal, Aberdeenshire

© Ken Taylor

Contribution to the economy

Responsibility for the oil and gas sector is reserved to the UK Government and all taxes go to the UK Treasury. The industry is the largest industrial contributor to the UK's GVA. Its' value to the UK economy was estimated to be £37 billion in 2008 ⁽³⁾. Based on the ABI figures, the GVA of the oil and gas sector in Scotland has been calculated as £16.033 billion in 2007 (at 2009 prices). The economic contribution of pipelines is included in the overall oil and gas value as they are part of the production process.

Offshore activity is supported by a highly specialised supply chain which supports a large downstream manufacturing sector. In 2008, supply chain exports were in the range of £4 billion to £5 billion.

Production from the UKCS has also contributed significantly to UK tax revenues, with approximately £283 billion (2010-11 prices) paid since production began in the 1960s. Research by the University of Aberdeen ⁽⁴⁾ suggests that since 1980-81, approximately 90% of North Sea production occurred in Scottish waters, raising approximately £242 billion in tax revenue for the UK Exchequer (at 2010-11 prices).

The oil and gas industry continues to be a major employer. Oil & Gas UK estimates that in 2010 some 196,000 Scottish based jobs were supported by the servicing of activity on the UKCS and in the export of oil and gas related goods and services. This includes not just direct employment but also wider effects on the supply chain.

Revenues and production from Scottish sea areas (2005-2008)

	2005	2006	2007	2008
Oil (£M)	£12,165,241,506	£13,388,862,880	£14,805,137,378	£20,137,179,023
NGL (£M)	£1,237,510,169	£1,528,300,660	£1,596,415,911	£1,672,490,269
Gas (£M)	£4,406,219,873	£5,580,566,901	£5,052,189,556	£6,934,189,380
Total (£M)	£17,808,971,549	£20,497,730,443	£21,453,742,846	£28,743,858,673
Oil (tonnage)	56,751,985	51,734,343	54,900,487	53,081,406
NGL (tonnage)	5,439,147	5,458,028	5,551,411	4,435,130
Gas (therms)	18,217,736,788	16,310,774,884	17,199,518,394	19,605,699,625

Source: DECC production figures split into Scottish sea areas

Tanker at Hound Point, Firth of Forth © SNH

Supply vessel approaching a jack up rig © Oil & Gas UK

Hydrocarbon fields, platforms, pipelines, coastal infrastructure and production (tonnage) and revenue per sea area (2005-2008)

Pressures and impacts on the environment

Pressure theme: Pollution and other chemical pressures
Pressure: Oil contamination from accidental spills

Impact: Oil spills may contaminate sediments, water and marine fauna with resultant knock on effects on food chains.
Pressure: Introduction of non-synthetic substances and compounds

Impact: Pollution and other chemical changes. Increase in naturally occurring radio-active material ( NORM).
Pressure: Chemical or oil contamination
Impact: Pollution and other chemical/oil discharges from accidental spills, exploration or production operations, including produced water, and from drill cutting piles.

Pressure theme: Other physical pressures
Pressure: Electromagnetic fields
Impact: Behavioural changes to electro-sensitive and magneto-sensitive species, for example, sharks and rays.

Pressure: Noise from seismic exploration activities
Impact: Potential impacts on noise sensitive species such as cetaceans and some fish species.

Pressure: Noise from drilling rigs, production facilities or vessels
Impact: Potential impacts on noise sensitive species (construction, operation and decommissioning).

Pressure: Noise and vibration
Impact: Burial of pipelines has the potential to cause noise and vibration causing avoidance of an area during installation.

Pressure theme: Habitat changes
Pressure: Smothering/siltation rate changes or abrasion
Impact: Physical loss/damage from construction and decommissioning activities, including laying of new pipelines.

Pressure: Physical presence of structures
Impact: Loss of species and habitat within the footprint of the structure. Colonisation of structures by organisms. Behavioural changes, death or injury of birds through interactions/ collisions with surface structures.

Pressure: Habitat damage
Impact: Loss of habitat and species in the 'footprint' of the pipeline. Physical disturbance of seabed substrata causing sediment re-suspension and increased turbidity.

Pressure: Habitat change
Impact: Seabed pipelines and vertical concrete and steel jacket structures provide a hard substratum for a variety of sessile epibenthic species to colonise and provide shelter for fish. Many of these changes may be beneficial.

Source: Based on CP2 PSEGFR table 3.68, 3.76 (See also table in Carbon capture and storage for related pressures and impacts) ⁽⁵⁾ and UK Marine Policy Statement ⁽⁶⁾

Pressures and impacts on Scotland's socio-economics

Positive

• Employment, both offshore and onshore Transferable skills of use to other sectors, in particular the offshore renewable energy industry
• Exports of both crude hydrocarbons and refined products
• Research that can be transferred to other sectors
• Supply chain benefits to a global market
• Energy security from indigenous resource

Negative

• Impacts on other sea users for example:
• Fisheries
• Renewable energy developments
• Telecommunications cables
• Shipping

Source: Based on CP2 PSEGFR section 3.9.6 & 3.10.6 ⁽⁶⁾ and UK Marine Policy Statement ⁽⁷⁾

BP Clair production platform

© BP

Sullom Voe terminal, Shetland

© Shetland Islands Council (Ports and Harbours Operations)

Forward look

Scottish waters are a mature oil and gas province but there could be up to 24 billion barrels of oil still to be recovered from the UKCS⁽⁵⁾, compared with 39.5 billion so far recovered. These are mainly in discoveries awaiting development, areas under current licence or regions where oil can be expected to be found, but has not yet been explored. Based on the average price of oil and gas forecast by the Energy Information Administration between 2009 and 2030, the wholesale gross value of these remaining reserves may be between £650 billion and £1.1 trillion.

A significant area with unexploited gas reserves lies to the west of Shetland. A new gas export pipeline from this area is currently being built to support the output from the Laggan and Tormore fields which are scheduled to start production in 2014. The amount of oil and gas imported into the UK is also likely to increase ⁽⁵⁾, requiring further gas pipeline import projects but none of the currently planned pipelines are in Scottish waters.

The longevity of the industry will depend on commodity prices, exploration and operational costs over the medium to long term and the ability to secure investment to fund new exploration and extraction activities.

Over the next thirty years decommissioning the offshore infrastructure will be a significant activity. Its timing will be influenced by a range of factors including long term trends in oil and gas prices, increased recovery of oil and gas from existing fields, future fiscal and regulatory regimes, reduction of decommissioning costs and technical innovations.

Oil & Gas UK estimates the decommissioning costs to be £2.4bn (west of Shetland), £8.8bn (northern North Sea) and £11.7bn (central North Sea - approx 90% of platforms are in Scottish waters) ⁽⁴⁾.

A potential new activity will be the use of depleted fields to store carbon dioxide captured onshore (see CCS section). When the geological conditions allow, depleted fields can be used as sites for the storage of gases generally (as a holding area) although these have not been developed in Scottish waters.

The skills and knowledge developed in the North Sea are still vital for the oil and gas sector but can also be transferred to other sectors such as renewable energy.