Total launchs gas project in Shetland Islands

SHETLAND -- Total officially launched a huge new gas project in Britain's remote Shetland Islands on Monday, hailed by London as a "vote of confidence" in the flagging North Sea oil and gas industry.

The French energy giant officially opened the Shetland gas plant in Britain's northernmost outpost, which cost £3.5 B ($5 B, or 4.4 B euros) to build.

The plant began processing gas from the Laggan-Tormore fields on February 7. Production has since been ramped up to its full capacity of 500 Mct (90 Mboed) of gas. The fields are expected to last for about 20 years.

The Scottish North Sea oil and gas sector has been reeling from a plunge in oil prices since mid-2014, leading the British government to cut taxes for the industry.

The Laggan-Tormore fields lie around 80 mi (125 km) northwest of Shetland. The development should provide 8% of Britain's daily gas requirements, and it opens the potential for further developments in the area.

During his speech inaugurating the plant, Total CEO Patrick Pouyanne said Total had invested £7.5 B in Britain over the past five years and now provides one-third of UK gas.

"We want to grow, we want to develop. We don't want to stick on our balance sheet, 'taking care,'" he said. "One of the objectives of Total is to become in 20 years one of the most responsible energy majors, which means to develop an aggressive strategy on gas and also to invest in renewables."

Alex Kemp, a petroleum economics professor at Aberdeen University, said the new pipeline between the Laggan-Tormore fields and Shetland could be used for other future projects.

"This year will continue to be quite tough for the oil and gas industry in the North Sea as brand new projects are not really viable in the current price environment," he said. "However, by next year, some projects which have recently been put on hold could be looked at again."

Laggan-Tormore is operated by Total with junior partners Denmark-headquartered DONG Energy and British energy company SSE, which each have a 20% interest.

Located in up to 600 m (1,970 ft) of water, the five wells tap reservoirs that lie 11,500 ft to 12,800 ft beneath the sea floor. The gas is treated at the Shetland plant before the processed gas is piped into Britain's main grid. The islands are around 105 mi northeast of the Scottish mainland.