Atlantic oil fever raises hopes for a `Houston of the Highlands'

LORD THURSO unbuckles his sporran and pulls out his reading glasses. In front of him, on the harbourmaster's table in the Highland fishing village of Scrabster, lies a map of the Atlantic west of the Shetland Islands. He runs his fingers over the patchwork of coloured stickers where green and red mark the black gold of offshore oil and smiles. "This," he says, "is our future."

In his kilt and tennis shoes, the bluff 72-year-old, his white hair matted with salt from the spray of the Caithness swell, is an unlikely visionary. But the fifth baronet of Ulbster, a former RAF pilot turned dairy farmer, has a dream: that one day Scrabster, the northernmost port on the Scottish mainland, will be Britain's Atlantic oil capital, the Houston of the Highlands.

That day, he insists, is fast-approaching. For the second time in 20 years, Scotland is in the grip of oil fever. Next month the Government will begin to award licences to the UK and US multinationals that want to drill for oil west of Shetland. This so-called Atlantic Frontier is the future of Britain's offshore industry. As production in the North Sea reaches a plateau, analysts say the Atlantic contains 30 per cent of Britain's known oil reserves - some 3.5bn barrels - and will guarantee supplies into the next century.

Amid tight security, the first test samples from the massive Foinaven and Schiehallion fields have come ashore. The results are encouraging and the oil companies are gearing up to spend some £10bn in the area in the next 20 years.

News of this second UK oil boom has reached every croft and fishing village along Scotland's north coast from Cape Wrath to Scrabster, the main white- fish harbour in the area with an annual catch worth £20m. There, the 20 residents have the smell of a new meal ticket in their nostrils. Lord Thurso, longest-serving member of the Scrabster Harbour Trust, points to the map to explain why.

"Look, Scrabster is perfectly placed to become the main port for development of the Atlantic Frontier," he says. "You see, the oil lies around 120 miles north-west of here but the companies that want to drill for it are based in Aberdeen and Peterhead 200 miles away. Aberdeen may be the best location for the North Sea rigs but it is on the wrong side of the country when it comes to future exploration and drilling.

"Scrabster is the only natural sheltered deep-water harbour on the north coast that could handle the large vessels which the oil companies will need to service their drilling platforms. We are the cheapest and most convenient location by far, and we want the work."

It is a re-run of the film Local Hero, with the traditional Highland lifestyle threatened by petro-dollars. But this time locals are convinced the story will have a new ending. Instead of crofters and fishermen uniting to block the development plans of an American multinational, they say they will help to build a new 700-metre breakwater as the first stage of a £25m harbour expansion programme to enable BP and the New York-based Amerada Hess Corporation to exploit the Atlantic reserves.

In an area blighted by the closure last year of the Dounreay nuclear power station, many locals say the new oil work is vital. Under harbour expansion plans drawn up by Lord Thurso and Ronnie Sampson, the former deputy governor of the Falkland Islands who now runs the local Harbour Trust, the ships to supply and carry out repairs for the oil platforms in the Atlantic will be Scrabster-anchored. A report published in February by the economic consultants MAI supports their case.

It says that with a rail-freight terminal at the nearby town of Thurso, an airport at Wick and hi-tech engineering workshops at the Dounreay nuclear power station five miles down the coast, Scrabster is the ideal location for a "West of Shetland" port.

Cutting sailing times to Foinaven and Schiehallion could save the oil companies more than £40m a year, while a new port would create up to 3,000 jobs in the local community and inject £150m a year into Caithness.

A few locals, however, do not want to become part of what they jokingly refer to as "th'awl business". Each morning, Jocky Manson, 50, stands on the harbour's edge watching the seals in the bay and the eider ducks dive for crabs. "We have a simple life and we like it that way," he said. "You know, I would not like Scrabster to become like London. I went there once and it was full of people with these mobile telephone things coming out of their ears. Dreadful, you know."

Scrabster's ambitious plans will face strong competition from the port authorities in Shetland and Orkney, which are bidding for the work. Lord Thurso and Mr Sampson will also have to overcome the oil companies' reluctance to leave Aberdeen and Peterhead. BP has said it is happy where it is.

But as the lobbying began at the annual trade fair in the Granite City last week, Mr Sampson insisted that the outlook for Scrabster was bright. "After a year in which we have been approaching a number of oil companies, they are now knocking on our door. A port is a sound investment for banks, which have already expressed interest, and we hope to get our hands on some EU cash."