As Grangemouth expands to receive U.S. shale, Ineos still optimistic about fracking in Scotland

Grangemouth plant INEOS

Eight years after being mothballed, Ineos’ Scottish plant Grangemouth is preparing to receive ethane derived from U.S. shale gas. The company confirmed that it has successfully completed operational trials on the second manufacturing unit (Train 2), which has undergone rigorous recommissioning trials to prepare for the arrival of U.S. ethane in the autumn.

The chemical giant Ineos, the owner of the Grangemouth plant, has in recent years refocused on shale gas to supplement the dwindling North Sea supplies.

According to Gordon Milne, INEOS Grangemouth Operations Director, “We are one of the few businesses in Scotland investing and growing our business on such a scale as this. With the successful completion of the Train 2 trial we are now in great shape to receive shale gas from the U.S. and to finally run the Grangemouth plant at full rates.”

“All the parts of the jigsaw are finally coming together and Grangemouth will soon be back in the premier league of European petrochemical plants. Ineos is one of very few companies with the imagination and skill to vision and deliver a project of this size and complexity.”

In the UK, Ineos acquired full fracking rights for a 330sq kilometres site in the Falkirk area, Scotland, as part of a deal worth £30 million with the UK’s largest shale gas developer but the company’s interests in this respect have been jeopardized by the moratorium on hydraulic fracturing imposed by the Scottish government in January 2015.

To stress its commitment to UK shale, Ineos has recently announced its intention to relocate its headquarters back to Britain. The company left the UK in 2010 for Rolle, just outside Geneva, cutting £100m from its annual tax bill in the process. The firm’s billionaire founder Jim Ratcliffe, who at the time clashed with Gordon Brown’s government over the company’s £350m VAT payment, told the Daily Mail: “We will finish up back in the UK within the next three years. We are Brits aren’t we? It’s where we started and it’s where our hearts lie.

“It was necessary for us to move to Switzerland a few years ago, but now, without question, we have been gravitating back to the UK.”

However, despite the company’s repeated committment to British shale, the future of shale exploration in the UK is far from being decided. While the Conservative Government strongly supports the development of shale, Wales opted to extend its moratorium on fracking on Friday. In Scotland, the country’s First Minister, Nicola Sturgeon, has reiterated her stance against unconventional oil and gas, revealing she is “highly sceptical” about fracking in response to Scottish Labour calling for a ban and going even further in a televised pre-election debate on Thursday night.

The First Minister said: “If there is any suggestion at all it harms our environment there will never be fracking allowed in Scotland as long as I’ve got anything to do with it”.

Seemingly undaunted by Ms Sturgeon’s hard stance against shale, Ineos’ spokesman said that the firm expected to be given permission to begin fracking once a moratorium ends next year and that it made little sense for Scottish manufacturing to be reliant on shale gas from America while domestic reserves go untapped.

He added: “We’ve had to import it from the States because at the moment there are no other sources. If you have indigenous sources of gas it makes far more sense to supply your manufacturing industry from that gas. That brings with it employment, skills and tax dollars and means money being spent in the country rather than elsewhere.”

The company also revealed that it will consider expanding its operations at Grangemouth if fracking in Scotland is given the go-ahead.

Despite such optimistic statements, the general consensus within the industry is that it will take good several years before any of the British shale leaves the ground.

This is why Ineos has sought a temporary solution by setting its sights on American shale. Two weeks ago, the company made history by chartering the first ever shipment of ethane from the Sunoco Logistics Partners’ Marcus Hook terminal in the U.S. to Europe. The company plans to ferry the fuel across the Atlantic in large purpose-built carriers creating a “virtual pipeline” from the U.S. to its plants in Scotland and Norway.

John McNally, CEO Ineos Grangemouth said, “Bringing the site back into profitability is the best way to secure our future here in Scotland. We know that ethane from US shale gas has transformed US manufacturing and we are now a step closer to seeing this advantage being brought to here to Grangemouth.”

The new import terminal at Grangemouth will also benefit the Fife Ethylene Plant facility in Mossmorran, Scotland.

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