INEOS, the operator of Grangemouth refinery and chemical plant, announced today it has completed the deal with IGas, making it the UK’s third largest shale gas company.
The deal – first agreed on the 10th March – includes the acquisition of a 50 per cent interest in seven IGas shale gas licences in the North West of England (the Bowland licences).
It also consists of a 60 per cent interest in three Petroleum Exploration & Development Licences (PEDL’s 145, 193 and EXL273) and a 50 per cent interest in a further four licences (PEDL’s 147, 184, 189 and 190).
In Scotland, INEOS will acquire IGas’ entire interest in PEDL 133 (the Grangemouth licence) which will give the company 100% ownership of this asset.
In addition, INEOS has the option to acquire 20 per cent in two IGas East Midland shale gas licences (PEDL’s 012 and 200).
INEOS will assume operatorship of PEDL’s 133, 145 and 193 and EXL 273 in phases.
Gary Haywood, CEO of INEOS Upstream, said: “We are very pleased to have completed this deal and will now work to integrate these assets into the INEOS Upstream portfolio. These are first class assets that have the potential to yield significant quantities of gas in the future.”
“INEOS’s scale, asset position across the UK, US shale gas expertise, and our expertise in managing oil and gas facilities will be a great match with IGas’s existing onshore asset base, and significant exploration and production capability,” he added.
INEOS is paying IGas a cash sum of £30 million and additionally committing to fund a two phase work programme of up to £138 million to develop the sites. IGas will reimburse its share of the work programme to INEOS upon commencement of commercial production.
INEOS bet hard on British shale with an investment 640 million pounds announced in November and a promise of a payment of 6 per cent of its shale gas revenues to UK homeowners affected by the shale exploration. The Swiss giant 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.
However, the company’s Scottish shale licences are not likely to be developed any time soon, due to the currently imposed moratorium on fracking in Scotland, although the company’s decision to further invest in shale licences in the country indicates that it is upbeat about the prospects of the moratorium being lifted.
In a recent interview, INEOS director, Tom Crotty, told the BBC that his understanding is that the Scottish Government imposed the moratorium on fracking “to take a breather while we gather information”.
The deal was also good news for IGas, which was affected by the falling oil prices, resulting in the company’s shares rising almost 20 per cent in midday trading in London, although they remain nearly 80 per cent below their level in June, when there was greater optimism about the prospects of the British shale industry.
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