INEOS considers pursuing fracking in the UK

16 December 2013 11:14 Source:ICIS News

A Cuadrilla drilling rig in Lancashire, UKLONDON (ICIS)--Switzerland-headquartered chemicals producer INEOS said on Monday that it is considering applying for a license to carry out hydraulic fracturing for shale gas in the UK, due to the high cost of energy in the country.

The UK government has been one of the most active in Europe in pursuing the development of a shale gas industry, granting exploration licenses to energy company Cuadrilla and establishing a dedicated unit, the Office of Unconventional Gas and Oil, to promote the sector.

A spokesperson for INEOS said there has been no final decision on whether to apply for a fracking license, but it is under consideration.

“We haven’t applied yet, but we are looking into it. We’re looking at our options,” a company spokesperson said.

A nuclear generator is under development in the country, but INEOS said that the cost of energy produced at the site will be too high once it comes online, predicted to take place in 2023.

The UK government has guaranteed a strike price of £92.50 ($151.64, €110.12) per megawatt hour (Mwh) of energy produced by new units at Hinkley C, Somerset, meaning that the government will top up the price for producers if wholesale energy costs fall below that point.

INEOS added that it has recently locked down a deal for nuclear power in France for €45/Mwh ($61.64/Mwh). Hinkley C is being developed by French utility company EDF, with the strike price to be in place for 35 years following the start of operation.

($1 = €0.73, $1 = £0.61, €0.84)

By Tom Brown