No reason why shale cannot lift UK economy - INEOS’ Ratcliffe

27 September 2016 17:41 Source:ICIS News

Jim Ratcliffe (for Joseph Chang)

GRANGEMOUTH, Scotland (ICIS)--There is no reason why shale gas cannot do to the UK what it has done in North America, INEOS chairman Jim Ratcliffe said on Tuesday.

The shale revolution has significantly lowered energy costs in North America and provided significant volumes of competitively priced chemical feedstocks. It has prompted $170bn of investment in the sector in the US, according to industry estimates.

The INEOS project to bring ethane from US shale deposits to Europe and the investment prompted in Scotland was “an illustration for the UK as a whole of what shale gas can do for the UK economy,” Ratcliffe said.

But he warned that the revitalising of chemicals production at Grangemouth, the largest chemicals production site in the UK, is only a brick in the wall for UK manufacturing. He bemoaned the fact that manufacturing had shrunk to represent below 10% of UK economic output, the lowest level for any developed economy.

Ratcliffe expressed disappointment that no Scottish minister was present at the celebrations to welcome the arrival of the first of its fleet of Dragon Class ships bringing ethane to Grangemouth and the revitalisation of the chemicals site. It was a disappointment, he said, because 10,000 local jobs had been saved because of shale.

“Shale has the potential to bring new investment and new jobs,” Ratcliffe said, while addressing the concerns of what he sees as a minority against shale gas and the controversial technique of horizontal fracturing, or "fracking", used to obtain it.

“It [fracking] is not unproven technology,” he said. Those concerned about fracking should perhaps visit the US and see the transformation of manufacturing under way there, he suggested.

While INEOS has completed its ethane project for Grangemouth on time and within budget, it is expecting this year to conduct seismic work on its large gas exploration licensed acreage in England before it applies of permission to conduct core sample drilling of potentially attractive shale gas sites. It is seeking to have test wells in place within two years.

INEOS faces some opposition, however, from various groups. The Scottish government has imposed a moratorium on fracking.

The UK has to make an offering to potential investors in manufacturing that is more attractive than elsewhere, Ratcliffe said. The future for manufacturing in the UK looked “pretty bad” he said, given the run down of supplies of oil and gas from the North Sea. He likened the decline in manufacturing in the UK to a “collapse”.

“A service economy in my view just does not work for the [world’s] fifth largest economy,” he said.

Some £450m has been invested at Grangemouth to build a jetty, a 4.5km (2.8 miles) ethane pipeline and a 60,000 cubic metre storage tank to provide feedstock for the company’s 760,000 tonne/year KG cracker.

INEOS is currently connecting the new ethane system at the site to an existing ethane pipeline between Grangemouth and the ExxonMobil/Shell joint venture ethylene plant at Mossmorran in Fife, Scotland. That will supply the Mossomorran plant with ethane that INEOS brings from the US.

That project will be completed in July next year, INEOS executives said on the sidelines of the Dragon Ship arrival celebrations.

Saudi Arabia’s SABIC is also investing to receive ethane at its cracker at Wilton on Teesside in the east of England. That project will see the Wilton cracker accept about 50% ethane and 50% propane and is said to be well advanced with completion possible in January next year.

SABIC has commissioned the building of three new ethane carriers, dissimilar in design to the INEOS Dragon Ships, from the Hartmann Group and the first vessel, being built in China, is expected to be available soon. An ethane storage tank, possibly larger than that at Grangemouth, which INEOS says is Europe’s largest, is close to completion.

By Nigel Davis