This week’s buyers: INEOS buys majority stake in Scottish shale gas licence

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Source: DollarPhotoClub

INEOS Upstream Limited has today signed an agreement with Reach Coal Seam Gas Limited (Reach CSG) to acquire an 80 per cent interest in Petroleum Exploration and Development Licence (PEDL) 162, in the Midland Valley of Scotland. This licence area of 400 km2 is next to PEDL 133, in which INEOS already owns a 51% stake of the shale layer. As part of the deal, INEOS will be the operator of the licence, and will fund the initial appraisal activity (consisting of 2 vertical science wells and 100 km2 of 3D seismic).

The deal is subject to relevant regulatory approvals, and is expected to complete within the next few weeks.

The British Geological Survey (BGS) has identified significant shale gas and oil resources in this area via the recent Midland Valley of Scotland report. The key objective of the first phase of appraisal is to determine whether these resources can be economically extracted.

‘INEOS Upstream’ is INEOS’ new oil and gas exploration and production business. The Business made its first move into the shale exploration on the 18th August with the purchase of a share of the shale section of PEDL 133. The licence covers 329 square kilometres of the Midland Valley of Scotland, which includes INEOS’ Grangemouth refining and petrochemical complex and the surrounding area.

INEOS Upstream CEO, Gary Haywood said, “I am delighted to have concluded this deal in Scotland, which is a very good fit with our existing licence interest in the adjoining PEDL 133. We are keen to move quickly to evaluate the potential of this resource, and determine if we can economically produce gas from this area. If we can, it will provide a local source of competitive energy and raw materials to support manufacturing jobs in Scotland. Our recent commitment to share the benefits of the gas production with the landowners and the community will also bring significant local benefits.”

Few companies in the UK have INEOS’ expertise or infrastructure to use and handle pressurised gases. It’s experience above-ground is widely acknowledged and now INEOS Upstream has engaged substantial sub-surface expertise into its business. World leading specialists from Mitchell Energy, the company credited with perfecting shale gas extraction in the USA, are now working with INEOS in the UK. Nick Steinsberger, Kent Bowker and Dan Steward have been working in shale gas extraction since the 1980s, and are regarded as leaders in their field. The team that pioneered the most effective method for safely extracting shale gas in the Barnett Shale in America, are now working exclusively with INEOS’ own on-shore gas exploration team.

“The former Mitchell Energy team were among the pioneers of the shale gas revolution in the US, and they bring a vast experience of successful shale gas production from various areas of the US. We are confident that our US team, together with our own experts, can safely and efficiently develop a successful business in Scotland, which will play a part in securing the energy supply of Scotland and the UK, and will bring significant economic benefits to the country and to the community,” says Gary.

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