Ineos to give 6 per cent of shale revenues to UK homeowners

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INEOS, one of the world’s largest chemicals company, announced on Sunday plans to give 6 per cent of its shale gas revenues to UK homeowners, landowners & communities who live above its shale gas operations, but opponents of fracking have accused the company of taking a “bribes and bulldozers” approach to shale exploration.

INEOS anticipates being a major player in the shale gas industry and believes it will give away over £2.5 billion over the life of its business. The company said that sharing of shale gas profits is commonplace in the USA and it believes this will encourage communities to support shale gas production in their neighbourhoods.

Jim Ratcliffe, INEOS founder and chairman says, “We think this is a game changer for Britain. Giving 6 per cent of the revenues to those living above our shale gas operations will give them a real stake in the success of the venture and encourage the development of the whole shale gas industry”.

Typically, those living in a shale gas community (approximately 100 square kilometres) would benefit from the output of 200 wells and split £375 million between them. Home and landowners directly above the wells would share £250 million. The rest of an INEOS shale gas community would share £125 million between them, making a substantial contribution towards new schools, parks, community centres and even hospitals. Over the lifetime of a single well, home and land owners would get over £1.3 million and the community £600,000.

Jim Ratcliffe adds, “Giving 6 per cent of revenues to those directly above Shale gas wells means the rewards are fairly shared by everyone. It’s what they do in the USA and we think it is right to do this here. It democratises the Shale gas revolution”.

INEOS is one of very few businesses that can use shale gas as both a fuel and a feedstock in its manufacturing plants. It is already spending hundreds of millions of pounds to import large quantities of shale gas from the USA to its Grangemouth facility in Scotland, a necessity as the availability of gas in the North Sea has declined.

INEOS believes that a UK shale gas industry could create thousands of direct new jobs and tens of thousands of indirect new jobs. The supporters of UK shale believe that is has the potential to make up a significant proportion if not the totality of UK gas requirements going forward. This would give the UK energy security for the first time in many years. Shale gas also produces approximately half the greenhouse gas of coal and so has the potential to significantly reduce UK greenhouse gas emissions.

But the offer failed to win over opponents of shale exploration, who see it as an attempt to pay off people rather than deal with their concerns. Simon Clydesdale, UK energy campaigner at Greenpeace, told the Guardian newspaper: “This is just more of the same bribes and bulldozers approach that has already proved a failure. With one hand the fracking industry goads the government into steamrolling people’s right to oppose fracking under their homes, with the other it offers cash incentives.

“The industry forgets people have legitimate concerns about fracking that won’t be easily assuaged by cash sweeteners. The simple fact that the shale lobby can’t win the argument on safety but has to buy up consensus instead will help convince people that nothing good will come from letting the frackers through the door”.

Tom Crotty, a director at Ineos, replied to the accusations of bribery saying: “We are damned if we do and damned if we don’t. We are either greedy capitalists or we offer bribes. More seriously we are trying to replicate how things have been done in the US.”

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