The move will bolster the reserves of the UK’s second largest gas supplier as its existing fields continue to decline, and forms a part of the company’s intended drive to explore new opportunities to meet its gas demand requirements.
SSE chief executive Alistair Phillips-Davies said the move contributes to the company’s drive to maintain a “balanced” portfolio of energy businesses.
“e have regularly set out our wish to seek new opportunities to increase SSE’s presence in the upstream gas sector where assets can be acquired for a fair price, and that is exactly what this deal represents,” Phillips-Davies said.
The new fields based north-west of the Shetland Islands are yet to begin producing gas but are expected to reach peak output by 2016 – at around five million therms of gas per day – and sustain these levels through to the end of the decade.
The acquisition will boost SSE’s reserves and resources to over six billion therms or over 100 million barrels of oil equivalent and allow its average annual volumes of gas produced to be at a higher level than those it reported in 2014/15 until around 2020/21; and remain above 200 million therms until around 2024/25.
Alongside the £565 million stake acquisition the company will also invest £350 million in the period to 2018 to complete the entire development of which around £170 million will be invested in the current calendar year.
At the same time SSE will take a 20 per cent stake in the Shetland-based gas processing plant which will deliver gas to the UK’s St Fergus Gas Terminal, and is described by the company as “one of the most important infrastructure developments in the UK”.
The plant is expected to become fully operational in the course of this financial year and is expected to process and export gas and condensate for producers west of Shetland well into the 2030s, SSE said.
“The acquisition, including the Shetland Gas Plant, represents further investment in the UK energy infrastructure that gives access to gas from northwest Europe to help secure energy for customers and to help meet the needs of our gas-fired power stations, which will have an important part to play in supporting security of electricity supply,” Phillips-Davies said.