Orkney Islands Council and Scapa Flow Asset Management Limited have signed an agreement providing access to the wartime oil tanks at Lyness.
SFAML is planning initial feasibility work, which could ultimately lead to the underground tanks being brought back into use as a fuel base.
Following the signing of the Memorandum of Understanding, the company will explore the potential for the Wee Fea underground storage tanks in Lyness to be utilised for the storage and distribution of low sulphur marine gas oil.
David Moir, Managing Director of SFAML, said: ‘’The strategic location of wartime tanks, their large storage capacity, and the adjacent natural harbour of Scapa Flow potentially add up to a turn-key solution for a project of this kind.
“We will be looking to see if the tanks could be used for the storage and distribution of low sulphur marine gas oil to the north Atlantic region and the north of Scotland.
“We aim to commence the initial due diligence process in the next few weeks. Bearing in mind that the tanks have not been utilised commercially for over half a century, this will be potentially challenging.
“However, our initial investigations have led us to believe that this asset does have the potential to serve as a first class, strategically placed low sulphur fuel hub.”
In a remarkable feat of engineering, six tanks were tunnelled into the hillside above Lyness during the Second World War to provide protection from air raids. They held up to 132 million litres (114,000 tonnes) of fuel oil for supply to British and Allied warships stationed in Scapa Flow.
Gavin Barr, the Council’s Director of Development and Infrastructure, said: “The potential to bring the tanks back into use has been looked at on a number of occasions over the years and we welcome this latest approach.
“This initial agreement marks a very early stage in the process. It matches how the Council has approached potential interest from developers in the past and gives the company access to the underground facility for early feasibility and testing work. We hope to have the results of this later this year when next steps can be considered by the Council in due course.”