Britain lays massive pipeline plans for North Sea oil

A mammoth gas-gathering operation in the North Sea has been approved by the British government, with terminals in Scotland soon to become the conduits for a multibillion dollar British petrochemical industry.

Initial plans call for creation of a 600-mile oil pipeline network by the mid-1980s, costing over L1.1 billion ($2.5 billion) and providing petrochemical feedstock worth L30 billion ($70 billion).

The basic concept is to "harvest" natural gas from beneath the turbulent North Sea by plugging Britain, via Scotland, into a huge reticulation system.

The Conservative government of Margaret Thatcher wants to see private capital used in developing the system. This is the most ambitious attempt so far to utilize natural gas, much of it currently being wastefully flared off in the stormy air over the North Sea.

Although there are hopes that Norway, with its own North Sea oil and gas fields, may join the pipeline system, British Energy Minister David Howell believes Britain could go it alone on the project, if necessary.

Mr. Howell believes the pipeline will be one of the major engineering projects of the second half of the 20th century. Eventually it will link 20 or more North Sea oil and gas platforms to pipelines terminating at St. Fergus in northeast Scotland.

Mr. Howell wants the system to be completed by the mid-'80s. Production would build to 1 billion cubic feet a day within the next five years, and to around 2 billion cubic feet by the late '90s.

If the Norwegians can be brought into the system, the entire gas-gathering complex will handle over 3.5 billion cubic feet a day before the year 2000.

Under the British government plan, three-quarters of the capital for the pipeline system will be raised without official guarantees. The Thatcher government hopes the entire project can be financed with a commitment of under L 100 million ($230 million) from treasury sources.

This aspect of the plan has made it particularly popular with private investors, many already committed to big oil companies like British Petroleum (BP) and Mobil. The project is stirring great interest in Scotland where there is a wish to boost prosperity by participating in rich growth industries. Planners north of the border hope Scotland will get a large slice of the gas-gathering action, with consequent benefit to local industry.

So far, Dow Chemicals, British Gas, and Higland Hydrocarbons have displayed a lively interest in building a gas separation plant near the St. Fergus landing point. Dow also wants to construct an ethylene conversion plant.

The project has strong backing from Prime Minister Thatcher, who has insisted all along that nongovernment capital should be used as much as possible.