New Gas Facility To Power Two Million Homes

A new North Sea offshore gas facility which will deliver enough energy to power two million homes has begun production.

The £3.5bn development by France's Total (Other OTC: TTFNF - news) in the Laggan-Tormore fields is expected to add the equivalent of 90,000 barrels of oil per day in gas representing 8% of UK gas supply.

It is enough to power two cities the size of Birmingham and comes 30 years after one of the fields, at Laggan, was first discovered.

The fields, each of which are the same size as thousands of football fields, are on the edge of the Atlantic (Shanghai: 600558.SS - news) and closer to Norway than the UK.

Each of them is equipped with a 900-ton superstructure on the sea bed 600m (370m) below the surface, extracting gas from a further 2km (1.2 miles) below, and pumping it to a pipeline in Shetland 140km (87 miles) away.

After treatment at the plant, gas is separated out from sand and water before being pumped to the mainland near Aberdeen.

Until today, only oil has been recoverable from the area. Now (Other OTC: NWPN - news) , with the pipelines and infrastructure in place, previously inaccessible energy reserves can be reached.

Arnaud Breuillac, president of exploration and production at Total, said: "Laggan-Tormore is a key component of our production growth in 2016 and beyond.

"The innovative subsea-to-shore development concept, the first of its kind in the United Kingdom, has no offshore surface infrastructure and benefits from both improved safety performance and lower costs.

"By opening up this new production hub in the deep offshore waters of the west of Shetland, Total is also boosting the United Kingdom's production capacity and Europe's energy security."

The company is operating Laggan-Tormore with a 60% interest alongside partners DONG and SSE (Other OTC: SSEZF - news) .

The announcement comes at a difficult time for the oil and gas industry in the UK.

The North Sea has been hit hard by plummeting oil prices, with industry leaders estimating that 65,000 jobs have been lost since 2014.

Shetland MSP Tavish Scott said: "This is an important first for Total, Shetland and the wider UK economy.

"There is nothing but doom and gloom from some about the future of oil and gas. Yet the prospects for west of Shetland developments look positive."