Liverpool Bay oil and gas project to go ahead: Power station brings pounds 1.5bn investment for North Wales

LIVERPOOL Bay is set to become an important new area for oil and gas production following the Government's decision to allow construction of a gas power station at Connah's Quay in North Wales.

The 1,360-megawatt station, to be built by PowerGen, the privatised generator, will lead to a total investment of pounds 1.5bn and create up to 3,000 construction jobs in the next three years.

In addition, it will trigger the development of an entirely new offshore sector to the west of mainland Britain, a few miles from one of the UK's economically deprived areas.

The sector is known to contain four virgin oil and gas fields with at least 200 million barrels of oil and about 1 trillion cubic feet of gas. The fields were discovered almost three years ago by a consortium of Hamilton, Lasmo and Monument, which is expected to spend up to pounds 1bn to bring them on stream in the next few years.

However, the project was thrown into jeopardy by the controversy over coal pits as gas from the fields was best suited for power generation. As a result, government approval was critical to the future of the venture.

Ed Wallis, chief executive of PowerGen, said: 'The consent is excellent news for the North Wales economy, for the Hamilton gas project and for the manufacturing sector, notably GEC Alsthom, which has already been awarded the turnkey contract.'

The company estimates that about pounds 500m will be spent to bring the combined gas-turbine station into operation. A large part of the consortium's investment will go towards building platforms and pipelines and on drilling work to bring the fields on-stream. The project also involves the construction of a new oil- and gas-gathering terminal at Point of Ayr, North Wales, which will be connected to the station by pipeline.

Planning permission to build the terminal was granted after an extensive public inquiry earlier this year.

As well as the 3,000 construction jobs - about 200 of which will be permanent - experts believe that there could be further significant spin-off benefits for the area and work for the design and fabrication industry.

The fields - Hamilton, Hamilton North, Lennox and Douglas - are located in relatively shallow waters. One is only three miles from the coast.

Hamilton, the operator, owns a 45 per cent stake in the blocks while Lasmo and Monument own 30 per cent and 25 per cent each. It is understood that the trio are in advanced negotiations to arrange financing for the project.