July 4, 2008

Earning Curve for Our Future ; Land Oil Well Bid As Prices Soar

DRILLING for oil at Scotland's first landbase rig has begun - as prices rocketed to a record high yesterday.

The pounds 10million project - using a curved well to get under the seabed - got under way at Lybster in Caithness as the oil price in London hit a record EUR146 a barrel.

If successful, the project could boost the ailing Caithness economy, which is being hit by the decommissioning of the Dounreay nuclear plant.

Operators Caithness Oil, with partners Reach Exploration, say they are hopeful the exploratory programme will lead to a commercial operation.

The company are to gauge reserves in two virgin fields in the inner Moray Firth.

They were discovered two decades ago but were considered too expensive by the major oil firms to drill using offshore platforms.

In recent months, engineers have been erecting the 170ft rig on a concrete platform in the crofting community of Swiney.

Banchory firm Reach Exploration - who have a 25 per cent stake - carried out the early research.

Using special drilling tools, engineers are boring a curved well from land to under the seabed.

Their survey indicated potential reserves in the Lybster field of three to five million barrels of oil, with the Knockinnon field being as least as productive.

Caithness Oil plan to take the oil by road to the Nigg terminal in Easter Ross.

Yesterday, Highlands and Islands MSP Rob Gibson said: "The potential for onshore oil drilling is huge.

"There is more oil under land than there is under the sea in Scotland that has yet to be retrieved."

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