Unlockingthewealthunderthewaters

Sep 23 2008 by Karen McLauchlan, Evening Gazette

PLANS are on track to build a £2bn heavy oil processing plant on Teesside - which aims to unlock black gold beneath the North Sea.

The specialist refinery, to be built on the Wilton site, could process its first oil in 2014.

The project, announced last October, is being undertaken by Sonhoe. It is the biggest single industry investment on Teesside and will be the first specialist plant of its type in Northern Europe.

Preparatory work is under way, including preparing a planning application.

The Teesside plant will process previously untapped heavy oil from the North Sea oil fields and from other oil fields across the world.

One recent estimate is that the North Sea oil reserves total more than 30 billion barrels.

About 2,500 construction jobs could be created when work starts on the Sonhoe plant and there would be 450 permanent jobs created. It could mean a further 1,500 spin-off jobs.

Earlier this year Sonhoe reached agreement with Chevron Lummus Global (CLG) and the Italy-based GE Oil and Gas in deals that will boost the project’s standing on the world stage.

The interest shown by GE Oil and Gas and Chevron - oil industry global players - is being seen as confirmation of Sonhoe’s credentials and as helping to pave the way for the largest single investment in the process industry in the Tees Valley for 20 years.

In a deal worth $200m - £111m - GE will provide Sonhoe with equipment including reactors, compressors, pumps and air coolers that will enable the plant to upgrade low quality, heavy oil into premium-quality low sulphur diesel, kerosene and naphtha.

The agreement with CLG is for a hydro-cracking technology needed to convert heavy crude oil into diesel.