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The Sunday Times: Hopes of Western Isles bonanza as Shell starts searching for oil: "IT IS one of Britain’s most depressed and hostile environments, but the Western Isles could be on the brink of an economic boom after one of the world’s biggest energy firms signalled plans to begin test drilling for oil off the coast of Lewis.": December 18, 2005

Jason Allardyce

IT IS one of Britain’s most depressed and hostile environments, but the Western Isles could be on the brink of an economic boom after one of the world’s biggest energy firms signalled plans to begin test drilling for oil off the coast of Lewis.

Shell has applied for a licence to drill a deep-water exploration well 58 miles northwest of the island and executives are optimistic that it will be followed quickly by commercial extraction.

Alasdair Morrison, Labour MSP for the Western Isles, said the development was of “staggering importance” and could lead to “a jobs bonanza” similar to that which transformed the north-east’s economy in the 1970s.

Shell intends to use a semi-submersible drilling rig early next year to test for oil and gas up to nearly a mile below the sea. Detailed geophysical seismic survey work has already been carried out in the sector, called North Benbecula. A previous exploration about four miles from the site found gas.

“They know there is oil there because they have carried out so much analysis and simulations of the sea bed already,” said a source close to the operation.

“They are very excited about it because it’s of major significance as the first find outside Shetland.”

Unlike most of Shell’s commercial activities in the North Sea, the Western Isles project may rely on giant floating extraction and storage systems shaped like large boats rather than traditional oil rigs. These are easier than fixed platforms to operate in remote offshore locations where deep water, strong ocean currents and harsh weather conditions may occur.

They can also be floated off at the end of a field’s productive life and re-used elsewhere, leading to environmental as well as economic benefits, particularly for marginal fields where the production facilities may be required for only a few years.

Plans to increase corporation tax for oil companies have caused uncertainty about future developments off Scotland, with Shell announcing last week that it intends to establish two new exploratory rigs in the North Sea rather than the three it had originally planned.

Politicians hope that the northwest of Scotland can now look forward to the benefits experienced in the northeast after 30 years of oil development. Aberdeen was pessimistic about its prospects as its traditional fishing activity faced a downturn. Then the North Sea oil boom reversed the gloom and transformed it into the offshore petroleum centre of Europe.

It led to a large influx of oil and gas workers and industrial operators settling into the area, creating jobs and lifting the local economy.

A similar boost could now await not only the Western Isles but also the nearest mainland port of Ullapool, where the arrival of roustabouts and executives could soon push up property prices.

Allan Wilson, the deputy enterprise minister who has held talks with Shell on its plans, said that the Scottish executive would liaise closely with the industry to try to maximise the economic benefits for the local community and the country.

“This is a very exciting development which has the potential to replicate the success of the Shetland experience and I hope it could be the first of a number of developments off the west coast of Scotland,” Wilson said.

Morrison added: “I believe this is of staggering importance to the Western Isles. I would hope that we would reap the benefits because we are the closest land mass. We have three airports and a huge reservoir of expertise among people who have worked all over the world and the skills to help out. I would also hope it could mean some of our brightest and best people who have left the islands will come home."

The population of the Western Isles has fallen for several decades and is projected to drop sharply over the next decade from 26,000 to 21,725 by 2018. The biggest decline the islands are experiencing is among people under 45, meaning that there are fewer children in local schools and greater pressure on social services because of the higher proportion of older people.

Archie Campbell, chairman of the sustainable development committee of the Western Isles council, said local politicians were keen on exploration and exploitation of oil in the area, so long as businesses in the Outer Hebrides were able to assist.

“We do not know exactly how much economic benefit could accrue to the Outer Hebrides, but if the North Sea and west of Shetland are anything to go by there could be very big prospects for the Outer Hebrides in years to come,” he said.

Shell refused to speculate on what its activities could mean for the Western Isles but said that it always aimed to be “a good corporate client” contributing funds to causes in the communities where it operates.

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