Ineos takes on anti-fracking lobby in a bid to kick-start UK shale

Fracking protest
Source: Adobe Stock

One of Scotland’s largest private firms, Ineos, is very serious about British shale. Following its relocation back to the UK, after a six-year tax exile in Switzerland, the company announced that is planning to lodge up to 30 planning applications to drill test wells in the UK over the course of the next six months.

The $50 billion petrochemical firm, controlled by British billionaire Jim Ratcliffe, already owns 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. However, the company’s interests in this respect have been jeopardized by the moratorium on hydraulic fracturing imposed by the Scottish government in January 2015. In the meantime the company focuses on importing shale gas from the US and developing its shale acreage near Hull in the north of England. One of the company’s directors, Tom Crotty, said that the company has plans to begin drilling in the north of England early in 2017, while gas extraction could start in 18 months.

Also, in October 2015, Ineos acquired offshore gas fields Breagh and Clipper South in the North Sea, in a deal thought to be worth £500 million. The properties were purchased from Russian billionaire Mikhail Fridman’s investment fund LetterOne, who was forced to sell following the imposition of international sanctions against Russia.

Following UK’s exit from the European Union, Jim Ratcliffe also explained that one of the company’s primary concerns is to continue its free trade with the EU, in particular with Norway, where the firm has a significant petrochemical business.

Ineos needs gas – and lots of it. Grangemouth, the huge petrochemical plant in Scotland, which only a couple of years ago was scheduled for closure needs cheap feedstocks to operate. The plant 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 has resulted in securing 1,400 jobs at the site for the next 10 to 15 years.

Despite current imports to Grangemouth seem secure, it clearly is frustrating for Ineos to sit on potentially huge indigent shale gas resources in Scotland and not be able to explore. Speaking to The Herald last Monday, 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”.

It seems that Ineos is slowly losing patience with fracking opponents in Scotland. While back in early 2015 the company adopted a conciliatory tone, recent statments from the company were far more confrontational in nature.

Last Friday, Gary Haywood, CEO of Ineos Shale took a direct stab at Friends of the Earth Scotland and the Scottish Green Party accusing them of “years of scaremongering” and of failing to provide credible evidence to back up claims that exploiting domestic shale gas reserves is more environmentally risky than realistic alternatives.

This signalled a significant change of direction for Ineos which so far has made limited public interventions in the debate. Accoring to an anonymous insider speaking to The Herald Scotland, the company, which contributes four percent of Scottish GDP, decided to “focus on the hypocrisy of the other side”.

In line with this new attitude towards the anti-fracking lobby, Gary Haywood attacked Mary Church, the head of campaigns for Friends of the Earth Scotland, saying her claims “starkly exposes a fundamental misunderstanding” of issues around fracking and had issued statements that flew “completely in the face of the facts.”

Mr Haywood said: “The UK currently imports around 50 per cent of its gas from overseas due to the decline in production of gas from the North Sea. This means that every pound the UK spends on imported gas leaves the country and does not return.

“Indigenous shale gas would not compete with North Sea gas, it would reduce imports, which would reduce emissions, and would provide the UK with a secure supply that is produced under the strict HSE standards we employ in the UK, as well as providing jobs in the UK and taxation to the country. There is no credible scenario where gas does not provide a large part of our energy needs for decades to come.

“We believe it is now time that Scottish Friends of the Earth and the Greens acknowledge that Scotland needs gas for decades to come, that an indigenous supply from under our feet is better for both the climate and the economy.”

However, Ms Church said that her statements have been taken out of context by Ineos, while Dr Richard Dixon, the director of Friends of the Earth Scotland, said that chemical giant Ineos was showing signs of “desperation”.

He said: “The company’s previous attempts to convince local people were not a notable success with a series of difficult public meetings across the Central Belt in spring last year.

“Its new offensive is a clear sign of desperation. Ineos knows that the Scottish Government’s forthcoming studies looking at health, climate change, earthquakes, house prices and traffic impacts are going to turn up the same kind of evidence that has led to fracking being banned in countries and regions across the world, with Germany the latest to ban shale gas fracking just last month.

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