INEOS to invest $1bn in UK shale exploration, production

(adds INEOS confirmation, quote in second paragraph)

LONDON (ICIS)–INEOS on Thursday confirmed plans to invest $1bn (£638m/€800m) in UK shale gas exploration and production, making it the biggest shale gas player in the country, pending the approval of licences.

Jim Ratcliffe, INEOS chairman, said: “I want INEOS to be the biggest player in the UK shale gas industry. I believe shale gas could revolutionise UK manufacturing and I know INEOS has the resources to make it happen, the skills to extract the gas safely and the vision to realise that everyone must share in the rewards”.       

The chemical producer’s upstream business has sought to acquire shale gas licences in Scotland close to its Grangemouth petrochemical site and has said that it is keen to move quickly to see whether it can economically produce gas from the area.

It would use the liquids from that gas, if the gas were wet enough, to provide feedstock for its gas cracker at the Grangemouth site. The company is currently building a large ethane storage tank at Grangemouth to allow it to import the  feedstock from the US as part of a $600m project to bring ethane to Europe.

Its US ethane supply agreements are for 15 years and the company wants to develop local feedstock sources by directly entering the shale exploration and production business in the UK.

INEOS said in October that it would take a manufacturing style approach to fracking and shale gas production, possibly in formerly industrialised areas of the UK, and intends to fully exploit the potential of the reserves it might have access to.

INEOS said late in September that it would offer about £2.5bn over the lifetime of its Scottish shale gas licence business to homeowners, landowners and communities close to its shale wells.

“Giving 6% of revenues to those living above Britain’s shale gas developments means the rewards will be fairly shared,” INEOS chairman Jim Ratcliffe said at the time. “INEOS has also hired some of the world’s leading shale gas experts to make sure the gas can be safely extracted in an environmentally responsible way,” he added.