Energy in History

Shetland's oil transformation

The discovery of oil in the North Sea had big implications for the northern-most part of the United Kingdom, Shetland.

The Atlantic archipelago was strategically placed for the new industry. Offshore production needs to eventually be landed. Shetland was in an ideal location when it came to fields in the East of Shetland basin. As a result, the islands became a booming hive of new industrial activity in the 1970s. Along with helicopter flights and servicing bases, the main focus was at the Sullom Voe inlet on the Mainland island. Here, BP oversaw the construction of Europe’s largest oil and gas terminal.

Cumulatively, tens of thousands of workers from across Scotland, England, Wales and both parts of Ireland were engaged in a huge effort. Although many of these workers were temporary, Shetland’s population increase permanently increased from around 16,000 to around 23,000.

Oil production became a crucial part of the islands' economy and a source of revenue for the Shetland Islands Council (SIC). The SIC were beneficiaries from an extension of powers to incorporate ports and planning negotiations with the oil companies, leading to a regime that contributed significant annual payments in the 1980s and 1990s. These were invested in the Shetland Islands Trust.

Islanders’ stories

Rosa Stepanova was a young German hitchhiker who arrived in Shetland by chance in 1976 whilst trying to get to the Highlands with some friends. She relocated permanently to the islands soon afterwards, and in June 2022 recalled the extent of change oil brought.

"In all the knock-on from the people who had money, people spent the money; people bought cars. But people also started to abandon sort of traditional industries, like you can't run a croft and work full time, and it was a massive, massive change."

Interviewed in August 2022, Jacqueline Birnie, who was a child in the hamlet of Mossbank at the time recalled transformation into a much larger oil settlement.

"As a little kid, I'm not going to lie to you, I benefited from this. I mastered the art of going along and speaking to the guys who were away from home and missing their families, and making sure I got 50 pence out of them, do you know what I mean, and kind of working the network. It's the only time I've been able to be successful, financially, with you know, kind of like fluttering my eyelids. But I mean, I'm being a bit flippant about it, but actually, my late grandmother, there was an Irish firm that was building the school, and we used to go and speak to them, and my grandmother used to love to listen to them singing, etcetera. But she made an absolute fortune out of them, as well, because they all wanted the Fair Isle jumpers, to send home to their families.

"I felt very much an outsider in my own home. And throughout my experiences in primary school, people came and went. And, you know, the first tranche of BP workers that came in were almost handpicked, they were the ones that were sent in to integrate with the community, very much, not PR, but I guess, in some respects, that’s what it was about. Let's build a community hall together, let's have community events, let's show that we're the good guys."

These changes both excited and worried the Islands Council. In 1974, the former SIC Convener, Edward Thomason, wrote to the County Clerk, Ian Clark, worried that despite the advantageous 'disturbance payments' achieved in negotiations: 

"Shetland could emerge from this period of industrial development [of] a native economy so ill-balanced or rundown that there would be no real basis on which to deploy the Reserve Fund."

Edward Thomason to Ian R. Clark, 19 August 1974, Shetland Archives, Lerwick, D53/2/1/4.1

Shetland’s achievements are distinctive in a Scottish and British contexts when it comes to municipal benefits from oil resources. They also though must be seen in the context of an industry which has generated billions in corporate profits.

Jonathan Wills, a leading Shetland journalist and oil researcher, sardonically commented in 1985 that in the past ten years, Sullom Voe had generated around three days' worth of current production levels, which was then 1.2 million barrels of oil. The oil companies had succeeded in the projection of Shetlanders as having performed

"a brilliant piece of horse-trading": "public opinion in the south is still bemused by the myth of the North Sea Arabs."

Jonathan Wills, 'Ten Years of Oil = three days’ worth for Shetland', Shetland Times, 3 January 1985