Ineos makes a fresh case for fracking in Scotland as it ploughs millions into its Hull plant

Grangemouth plant INEOS
Source: Georgraph.uk

The global petrochemicals group Ineos has come up against renewed criticism from Friends of the Earth Scotland (FoES) and the Scottish Greens following the appeal from its chief executive to lift the ban on fracking in the country. The statement from Ineos comes at the heels of the announcement of the first major investment into the UK since the country voted to leave the European Union – a multi-million pound expansion for a manufacturing site in Hull has been unveiled by Ineos Oxide.

Speaking to The Herald last week, John McNally, who runs Ineos’ huge Grangemouth site based in Scotland, said that it was “crazy” that the company has had to invest millions to import and process shale from the U.S. when shale gas resources are sitting “a couple of kilometres underneath our feet in Grangemouth”.

The Ineos’ Grangemouth site, which only a couple of years ago was scheduled for closure, has recently received a £450 million investment in an ethane terminal which will allow the company to import liquid ethane to Scotland from the U.S. and process it into ethylene and polyethylene for a variety of uses. The investment, according to Mr McNally, has resulted in securing 1,400 jobs at the site for the next 10 to 15 years.

Ineos is sitting on a number of shale exploration licences around central Scotland, but as fracking is currently banned in the country, the company currently relies on imports of shale gas from the U.S. as well as focusing on fracking activity from its site in Hull in the north of England.

That doesn’t mean that Ineos has given up on its Scottish acreage. Asked if now was the right time to lift the moratorium in Scotland, given the post-Brexit uncertainty in the economy, Mr McNally said: “Absolutely. There are two issues. Manufacturing overall is now 10 percent of GDP, according to the World Bank, which is quite concerning. The other issue for us is energy prices.

“Energy prices in Europe in general are two to three times as high as they are in the U.S. Anyone can look at what’s going on in the U.S. – they’ve had a whole manufacturing revolution around shale gas and low energy.

“If we had our own shale gas economy here we could have lots of natural gas and feedstock to supply plants like mine. It’s a double win as far as I’m concerned.”

Mr McNally also argued that in the post-Brexit world it is even more important to support British domestic manufacturing, adding that Ineos has been very concerned about the decline of the sector in the UK. “We are trying to put our money where our mouth is by doing something about it” he said.

The company is currently engaged in upgrading the Grangemouth facility which, according to Mr McNally, has suffered decades of under-investment.

“We’re making space to bring new investments on to the site,” he said. “Those investments might be Ineos’ investments, but they also could be third-party investments. We’re quite open to the idea that we are a landlord that could provide infrastructure to other companies that would come on to the site. We’ve done that very effectively at our site in Antwerp in Europe, for example.”

One of these investments is a pipeline that will link Ineos’ petrochemical plant in Grangemouth with Ineos Oxide in Hull, which will allow the Hull plant to benefit from the company’s $1 billion worth of imports of shale gas from the U.S.

The Hull facility itself is set for a multi-million pound expansion scheme that will see the company increase its production of Ethyl Acetate (EtAc), which is used in pharmaceuticals, cosmetics, inks and flexible packaging, by 100,000 tonnes each year.

Ineos Oxide founder and chairman Jim Ratcliffe said: “Our Hull plant is at capacity and this extra investment will enable us to significantly increase production that we will sell all over Europe and across the world.”

Originally built with the possibility of further expansion, the Hull site will also benefit from easy logistical access to Europe and the wider global market, which will support both the impact of raw material and export of EtAc.

Hull MEP, Mike Hookem welcomed the investment calling it “a victory for common sense and a sign of things to come in the post-Brexit era”.

Mr Hookem said, “This is great news for the people of Hull and categorically proves the doom and gloom merchants in the “remain” camp wrong.”

Across the border, in Scotland – where the SNP announced a moratorium on fracking last January, but stopped short of an outright ban to allow for further consultation and a public health impact assessment – John McNally’s calls for allowing shale exploration came up against strong resistance.

Ross Greer, MSP for the West of Scotland, urged Hollyrood to ban fracking completely arguing that the “Scottish government’s ambiguity over its fracking position is clearly giving hope to companies like Ineos, who are gearing up to begin this hazardous practice in Scotland.”

Mary Church, head of campaigns at Friends of the Earth Scotland, expressed doubts whether hydraulic fracturing could ever be given the green light in Scotland. She said: “Not only has the first minister made it clear that she is highly sceptical about the supposed benefits of fracking, but the Scottish Parliament has voted to ban it.

“It’s hard to see how the government could come to any other conclusion when it finishes its evidence gathering under the current moratorium.”

 

Back in March, Scotland’s energy minister Fergus Ewing defended the Scottish Government’s decision to hold a national debate on fracking.

He said in March: “We think that we should take a moderate approach, based on analysing evidence and thereafter having a debate and coming up with a conclusion after involvement with and consultation of all of the people of Scotland. I suspect that quite a lot of people in our electorate, the people of Scotland, would like to know a bit more about the issue.”

Article continues below this message

Have your opinion heard with Shale Gas International

We accept interesting, well-written opinion and analysis articles of up to 1,500 words, that offer unique insights into the shale industry. The articles cannot be overtly promotional in nature and need to fit into at least one of our content categories.

If accepted, the article must be exclusive to Shale Gas International website and cannot appear on any other websites, publications, etc. Each article may contain up to three links to external websites relevant to the content discussed in the piece.

If you would like to contribute to Shale Gas International website, please contact us at: editor[at]mw-ep.com