Deep-sea gas gets go ahead

The UK government today gave consent for Total and Dong Energy to develop the Laggan and Tormore gas fields, which lie in 600m of water and in one of the most hostile environments in the UK.

These will be the first gas fields to be developed in UK waters at this depth. The fields have estimated total recoverable gas reserves of around 28 billion cubic metres plus some condensate, and an expected peak production rate of around 14 million cubic metres of gas a day.

Business secretary Peter Mandelson, visiting Aberdeen today, said: ‘The announcement today that this £2.5bn investment is going ahead is a major win for the Shetlands, for Scotland and for the UK.’

The Laggan and Tormore fields will be connected via a subsea pipeline to a gas-processing plant at Sullom Voe on the Shetland Islands, with further export of the processed gas to the UK Frigg (FUKA) pipeline system in the North Sea and then on to the St Fergus gas terminal on the Scottish east coast.

In January, the government announced an incentive to extend its ‘field allowance’ to remote deep-water gas fields, such as those in the west of Shetland area, for which Total and Dong Energy qualify for. The allowance could provide up to £160m worth of tax relief for each gas field in the west of Shetland region that qualifies for the support.

Assuming the project proceeds on schedule, the first production of gas from the Laggan and Tormore fields is expected in 2014.