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

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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.”

INEOS said that most of the licences it seeks are in locations with either a mining or industrial heritage and that it has “uniquely guaranteed” to give 6% of revenues generated to local communities.

The company currently owns two shale licences in Scotland covering 120,000 acres.

Substantial further investment would follow, it added, if the company moved into development and production.

An indigenous shale gas industry would transform UK manufacturing, it said, adding that the gas can be extracted safely and responsibly.

Hydraulic fracturing of deep shale deposits has acquired a controversial reputation but has transformed the energy and petrochemical industry in the US.

A public opinion poll carried out for INEOS in October by market research firm YouGov showed 40% in the UK in support of fracking and 34% against. In Scotland 46% of a sample were opposed to fracking while 36% were in support.

“We believe our knowledge and experience in running complex petrochemical facilities, coupled with the world class sub surface expertise we have recently added to our team, means that INEOS will be seen as a very safe pair of hands,” said CEO of INEOS Upstream, Gary Haywood.

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.

Switzerland-headquartered 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 that 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.