Ineos Upstream secures Scotland’s only shale licence

Gas processing plant
Source: DollarPhotoClub

The Swiss petrochemicals group Ineos has bought the rights to explore for shale gas in the area around the Grangemouth refinery complex in Scotland – The Daily Telegraph reported yesterday.

The company said it has bought a 51% stake in the shale portion of the PEDL licence area – Scotland’s only fracking exploration licence – from BG Group PLC. The remainder of the stake in the licence is owned by Dart Energy, the Australian firm currently in the process of being taken over by IGas Energy PLC.

The amount paid is not known but it is believed that the specially formed division of the group, Ineos Upstream, has paid tens of millions of pounds for the licence which covers 127 square miles in the Midland Valley, spanning the Firth of Forth and including Grangemouth, Falkirk and much of Stirling.

Gary Haywood, chief executive of Ineos Upstream, said: “This is a logical next step for Ineos and we are very excited about it. With our large asset base, existing operational capabilities and exemplary safety and environmental record, we are well placed to become a major player in the UK onshore gas production sector.”

He added: “Over the last year Ineos Upstream has been drawing together a team of experts in the sector, including a number of leading shale exploration and development specialists from the US. This expertise gives us the perfect platform to move into onshore exploration.”

In January 2013, Ineos set itself to become the world’s first US ethane exporter after signing a 15-year shipping agreement with Evergas for the transportation of ethane into Europe from the US Mariner East project. The new Scottish shale licence will add another source of natural gas for the company’s Grangemouth plant.

Grangemouth – which was threatened with closure in an acrimonious industrial dispute – has been subsequently revived by Ineos when it won a £230m loan guarantee from the UK Government to build a new terminal to import, store, and process ethane from shale gas. By 2016, Grangemouth will be a shale gas-based facility, which Ineos said is essential if it is to compete in world markets beyond 2017.

Mr Haywood explained: “We are one of very few businesses that can use shale gas as both a fuel and a petrochemical feedstock. Ineos is well-placed to become a major player in the UK onshore gas production sector.”

Holyrood’s energy committee convenor, Murdo Fraser, welcomed the deal, which he said would protect Scotland’s future energy supplies and create job opportunities.

He said: “I hope this will be a step forward in developing an unconventional gas capacity in Scotland.”

However, Scottish Green co-leader Patrick Harvie called on the SNP government to resist the practice, which he claimed was damaging to the environment.

He said: “We know that the UK government is pro-fracking. The Scottish Government needs to stand up to this as it has the powers to put the brakes on fracking. Exploiting fossil fuels is something we can’t afford to do. The priority should be a shift to renewables.”

Last Friday, Scottish energy minister, Fergus Ewing, made it known that in Scotland shale gas companies should expect a less smooth ride when it comes to exploration than in England.

He said: “UK Government proposals to remove the right of Scottish householders to object to drilling under their homes flies in the face of that approach and that is why we object to them. It is also fundamentally an issue affecting land ownership rights,” adding “The gung-ho approach of the UK government to the whole issue of unconventional oil and gas, often without any consultation with the Scottish Government at all, contrasts with our approach.”

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