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Plans to make Orkney liquid natural gas (LNG) storage leader

image copyrightDaniel Mainland
image captionExxonMobil says Scapa Flow is the ideal location for a liquid natural gas hub

Orkney could become a major base for the supply of liquid natural gas (LNG) to the north of the UK and North Sea.

ExxonMobil has formed a consortium, which has signed an agreement with Orkney Islands Council.

New regulations come into force on emissions from shipping in 2020, which could inflate the demand for LNG.

James Stockan, of Orkney Islands Council, said it was "early days", but could allow Orkney to lead an important new energy supply chain.

The co-operation agreement, Caledonia LNG, also involves Babcock International Group and Bernhard Schulte Shipmanagement (BSM) and Calor.

Under the terms of the memorandum, ExxonMobil is to explore the potential for its network to deliver LNG bunker fuel to customers in the region, as well as providing technical support to enable safe LNG bunkering operations.

Babcock International Group is to provide its experience of storage and distribution of LNG, while BSM would be responsible for supervising the building and marine craft.

Calor is to investigate opportunities to supply LNG to industrial and automotive sector customers, and Orkney Islands Council would supply port services and security.

ExxonMobil said a recent decision by the International Maritime Organisation (IMO) would see a global 0.50% sulphur cap on vessel emissions in 2020.

It said this was likely to increase demand for compliant low-sulphur fuel options, which could include LNG.

New vessels are now being built to run on LNG to lower carbon emissions.

Mr Stockan said "LNG clearly has a pivotal part to play in meeting low-carbon marine and land-based energy needs in future and we look forward to working as part of the consortium in taking this initiative forward.

"Once again, this project highlights Scapa Flow's strategic importance as a safe and sheltered anchorage - and that we have the ideal location and the expertise to provide port services for an operation of this kind."

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