Pilot Pentland Firth and Orkney Waters Marine Spatial Plan - Socio-Economic Baseline Review

This Socio-Economic Baseline Review provides a regional overview of the Pentland Firth and Orkney Waters area for the pilot Pentland Firth and Orkney Waters Marine Spatial Plan. It also informs the Sustainability Appraisal for this Plan.

11 Oil and Gas

11.1 Spatial Extent and Intensity of Activity and Interests

11.1.1 There are no hydrocarbon fields in the PFOW area. Nonetheless the oil and gas industry has a significant presence in Caithness and north Sutherland, with Wick and Scrabster harbours providing services and support for the sector. Scrabster Harbour is the nearest port of call on the Scottish mainland for oil fields to the west of Shetland. The Invest Caithness Oil & Gas Directory 2012 [43] identifies around 20 businesses in Caithness and north Sutherland involved in the oil & gas supply chain. Figure 12 shows Oil and Gas activity in the PFOW area.

11.1.2 The Flotta Terminal is a crude oil storage and processing terminal, located on the island of Flotta in the Orkney Islands (the coastal installation identified in Figure 12). It hosts the sole oil and gas pipeline in the PFOW area. It was commissioned in January 1977, with Talisman Sinopec Energy ( UK) becoming the major shareholder and operator in May 2000. The terminal covers a 395-acre site, approximately one sixth of the area of Flotta Island. Crude oil is imported to the Flotta Oil Terminal from several offshore installations through a 30" subsea pipeline. The pipeline is fed from fields in the Flotta Catchment Area [44] .

Figure 12 Oil and Gas Activity in the PFOW Area [45]

Figure 12 Oil and Gas Activity in the PFOW Area

11.2 Economic value and employment

11.2.1 Scottish Annual Business Statistics data provides figures for Highland and Orkney Islands Local Authorities for both Oil and Gas Extraction and Oil and Gas Services. There is one business site registered in Orkney Islands and one in Highland for Oil and Gas extraction. However as these cover five or fewer business sites this data are disclosive. Oil and Gas services are classified under "Mining support service activities" which also includes "support activities for other mining and quarrying". Given the low level of business sites this is unable to be disaggregated further meaning that the statistics in Table 23 below will necessarily be an overestimate. There were two mining and quarrying support services units in 2012 and one in 2011 in Highland. For the most recent year available (2012) there were 6 business sites involved in Oil and Gas services in Highland. Between 2008 and 2012 there have been none in Orkney Islands.

Table 23 Highland Local Authority Mining Support Service Activities [46]

Year Total Employment Total Turnover Gross Value Added at Basic Prices Gross Wages & Salaries Per Head
£m £m £
2009 90 50.3 30.1 45,346
2010 38 17.8 9.4 61,004
2011 33 12.1 * 71,522
2012 62 5.6 2.9 21,660

* Denotes that data are disclosive

11.2.2 Further information is available from Oil & Gas UK's estimates of employment attributable to the oil and gas sector, shown in Table 24. These are calculated using expenditure levels to other industries in the UK economy. These are then converted into employment figures using turnover per employee estimates for each recipient industry. The sources of data for this are the ONS UK input-output tables, the Annual Business Survey and Oil & Gas UK's estimates for operating and capital expenditure. The employment estimates are not based on a survey of employment levels but are linked to the sector's spending on capital goods, operational expenditure and wages. The impact of profit, income and tax revenue has been excluded.

Table 24 Employment Impacts by Parliamentary Constituency [47]

Location Direct Indirect Induced Total
Orkney and Shetland 170 630 300 1100
Caithness, Sutherland and Easter Ross 30 290 140 460

Direct employment - Those employed directly by oil and gas companies and their major contractors.

Indirect employment- Those employed in the wider supply chain through contracts with oil and gas companies.

Induced employment - Jobs supported by economic activity induced by employee's spending throughout the economy.

11.3 Historic and future trends

11.3.1 Whilst there is no known oil and gas extraction planned for the PFOW area, the future trends in Oil and gas services will be heavily dependent on future investment decisions in the North Sea.

11.4 Data Gaps and Limitations

11.4.1 In addition to the aforementioned issue regarding the inclusion of some mining sites, taking the total figure for Highlands is also likely to be an overestimate given that the southern inland part of the local authority is not within the PFOW area.

11.4.2 The Oil and Gas UK figures provide an indication of the potential supply chain impacts of the industry but the estimates will overstate the impact on the PFOW area due to the inclusion of Shetland and other areas.


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