Sullom Voe, at 50, looks to the future

Laying the foundations

As oil companies began to announce finds in the waters east of Shetland, the Zetland County Council moved quickly to ensure that, whatever scale of development proved necessary, the islands would avoid the sorts of impacts often associated with oil exploitation elsewhere. The protection of Shetland’s way of life and environment were of the highest importance.

The roots of the council’s approach lay in the circumstances prevailing in Shetland at that time. The 1950s and early 1960s had been difficult, and – in common with much of the Highlands and Islands – Shetlanders didn’t share in what was, for much of Britain, remarkable post-war progress. Instead, the population drifted steadily downwards, to below 18,000.

However, the establishment in 1965 of the Highlands and Islands Development Board came at a moment when signs of recovery in Shetland had begun to appear. Shetlanders were quick to take up the opportunities that the new body created. By the end of the 1960s, the islands’ traditional industries, especially fishing and knitwear, were in a much healthier state.

The new prosperity stimulated confidence, and that played a crucial part in what happened next. The Zetland County Council was able credibly to argue that the oil industry needed Shetland, whereas Shetland didn’t need the oil industry. The council’s position was therefore that oil would come on Shetland’s terms.

It obtained its own legislation, the Zetland County Council Act 1974, which enabled it to acquire and lease the land needed for the terminal, establish a harbour authority and create a fund based on harbour profits. The Act also enabled joint ventures, which generated other income streams. These included partnerships in the supply of harbour tug services, the provision of accommodation for the temporary workforce and a quarrying business. Separately, the council also negotiated a levy of a penny per ton of oil passing through the terminal.

At the core of the council’s approach was an insistence that there would be only one terminal and that it would operate on a common-user basis, with BP managing the complexities of dealing with more than 30 partners. A joint council-industry company, the Sullom Voe Association Ltd., oversaw the construction and subsequent management of the terminal.

The protection of Shetland’s natural environment was a priority from the outset and the arrangements put in place to do that were ground-breaking. Under the auspices of the Sullom Voe Association, an independent monitoring programme was put in place that ensured that any changes in the islands’ environment were identified and managed. The Shetland Oil Terminal Environmental Advisory Group (SOTEAG) was and is independently-run, overseen by a university-chaired board and including representatives from local and national environmental organisations and regulators.

There was much practical work to be done to accommodate the terminal and the permanent workforce. Around 1,000 new homes had to be constructed, mostly by the council but also by BP. These were distributed between three existing settlements at Voe, Brae and Mossbank, and one other location, Firth. New schools and community facilities had to be provided; roads had to be rebuilt.

Not all of the developments took place in the north mainland; new bases to service the offshore platforms were established in Lerwick and Sandwick. Sumburgh airport, handling unprecedented levels of traffic, gained a large new terminal. Unst and its airstrip played a part for some years.

The challenges

None of this was easy. As soon as the opportunity presented by oil emerged, speculators moved in, buying up options on land and even proposing to build and run the terminal. The council was determined to resist these moves, and it helped that both BP and Shell quickly decided that it was better to work with the local authority.

However, the council also had to face opposition from within Shetland. The concept of compulsory purchase didn’t sit easily with many local people, and the acquisitions were only able to go ahead after various reassurances had been offered and the land area to be purchased had been somewhat reduced.

Nor was the passage of the Act straightforward. It straddled a general election, and the notion of compulsory purchase also met some resistance in parliament. However, it eventually won sufficient support, thanks in large measure to the persuasive case made for it by the then MP for Orkney and Shetland, the widely-respected Liberal leader Jo Grimond. In Shetland, success was built on the vision of the council’s leaders, notably Alexander Tulloch, George Blance and Edward Thomason, allied to the unwavering determination of their County Clerk and General Manager, Ian Clark.

Construction of the terminal took more than four years, with up to 7,000 workers employed. Two large and well-equipped construction villages and two ships were used to house the workforce. Accommodating them, feeding them, and transporting them both to and within Shetland were huge tasks, which themselves employed hundreds of local people These were very well-paid jobs, and for some time there was a real concern about the future of some of the traditional industries, especially knitwear and tourism.

By November 1978, though much work remained to be done, the terminal was ready to receive the first oil via the Brent pipeline, from the Dunlin field. The official opening, by Her Majesty the Queen, followed in 1981.

Production increased in the early 1980s, peaking in 1984 when it handled 439 million barrels of oil, an average of just over 1.2 million barrels per day. Although throughput slowly declined thereafter, oil from west of Shetland began to supplement that from the east, with the large Clair field coming on stream in 2005. In 2016, Total opened a new gas plant adjacent to the terminal, receiving gas from the Laggan-Tormore field and others. Its gas is piped to the UK mainland, but the liquids are piped to the Sullom Voe terminal.

It was obviously necessary to bring in many staff from outwith Shetland, especially in the early days, but many Shetlanders took up posts, and that proportion steadily increased over the years.

Another important factor in developing and maintaining the terminal was the strength of the Shetland supply chain. Many local people have always been highly skilled in roles like marine engineering and Shetland firms today undertake specialised work, sometimes well beyond the islands’ shores. Local businesses are used to providing services to the offshore oil industry, the fishing fleet and every other component of the local economy. In recent years, the decommissioning sector has also been able to draw on that highly skilled labour pool and a very capable infrastructure.

There is no question that the arrival of oil transformed Shetland. The local economy expanded, often with various forms of support from the council and other sources. High quality public services and facilities were provided. The money received from the penny-per-ton disturbance levy was channelled to a new charitable trust, which invested it and used the interest earned to support other new local charities operating in the environment, heritage, arts, recreation and social care fields. Facilities such as care homes and leisure centres were provided, including no fewer than eight indoor swimming pools across the islands.

Views may differ on the extent to which the islands’ social and cultural life has changed, and to what extent any change stems from the arrival of oil or simply reflects wider national or international trends.

However, one early, very understandable, response to the arrival of oil was a renewed focus on all the historical and cultural aspects of Shetland life that were thought to be at risk. For example, local history groups were either formed or strengthened, creating district museums the length and breadth of the islands. A superb new museum in Lerwick opened in 2007 and it was later joined by a first class arts centre featuring two cinemas and a concert hall.

The possible impact on Shetland’s linguistic heritage was a concern too, and measures were put in place to protect and promote it. Ultimately, in 2025, what had previously been considered a dialect was officially recognised as a distinct language, Shaetlan. There were parallel developments in other spheres, including the environment, the arts and music.

Fifty years after construction began, the terminal is entering a new phase. Although the flow of oil and gas is well below the 1980s peak, it looks likely that the site will continue to be a hub for energy developments far into the future.

The management of the terminal passed from BP to EnQuest in late 2017, with the new operator focused on extending the life of existing oilfields and keeping the terminal competitive. One of the first moves is the construction of a new stabilisation facility that will be better suited to current and future production rates. That will allow the old process area to be retired, freeing up a large area of land for other possible facilities.

However, EnQuest and its partner, Veri Energy, have been looking at other possible developments that stem from the need to decarbonise both the terminal and the global economy. The possibility of powering the terminal using electricity generated in Shetland’s wind farms is on the table, but there would be even more substantial gains from using the same renewable energy to supply the electricity needed by offshore production platforms, which will probably continue to operate for at least another two decades.

Those same windfarms, both onshore and – if developed – offshore, might also power a plant producing ‘green’ hydrogen, another ingredient in a future zero-carbon energy mix. The ambition is annual production of a million tonnes of hydrogen. There is also interest in producing ‘green’ ammonia.

These could be exported to wherever in the world they were required. Sullom Voe could thus make a very significant contribution to the reduction of carbon emissions in many fields, including transport and industry.

Also being considered is the use of the terminal as a hub for carbon capture and storage, re-purposing depleted oilfields. The port, with its deep-water jetties, is an obvious asset, and so is the network of undersea pipelines connecting the terminal to those oilfields. Initial studies have suggested that up to 10 million tons of CO² could be put into storage annually. Veri Energy has been offered four licences for this project, awarded in 2023 by the North Sea Transition Authority in its first licencing round.

Marking the anniversary

After fifty extraordinary years, it’s right to mark the arrival of the oil industry and its contribution to island life. It has joined earlier components of Shetland’s economy, including fishing, agriculture, knitwear and tourism, as a part of Shetland’s heritage.

It’s fitting, then, that one of the ways in which the story is being told is through a fully updated display in the Shetland Museum and Archives, where the arrival of oil has been documented since the new building opened.

EnQuest has also commissioned a video, with contributions from several local people who have played a part in this piece of Shetland’s modern history. You can watch it here.