Grangemouth owner hires global oil experts and invests for Scottish shale gas boom

 

Ineos' Grangemouth refinery
Ineos’ Grangemouth refinery

INEOS Upstream is the company’s new oil and gas exploration and production business. Last year, it bought a 400 sq km licence for shale gas exploration and development in central Scotland adjacent to the 329 sq km area around its Grangemouth plant which it acquired last summer.

INEOS Upstream also signed an agreement with Reach Coal Seam Gas Limited (Reach CSG) to acquire an 80% 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.

Ineos plans to drill test wells to determine whether the resources can be extracted at a reasonable cost but – as EXCLUSIVELY revealed** in Scottish Energy News – it remains within the power of the UK Energy Minister at the Department of Energy (DECC) to approve these licences, notwithstanding the ‘fracking freeze’ announced last month by Scottish Energy Minister Fergus Ewing.

** ‘UK shale gas licence ‘timebomb’ continues ticking below Scottish fracking moratorium’ – http://goo.gl/ziW2fv

The PEDL 133 licence covers 329 square kilometres of the Midland Valley of Scotland which includes INEOS’ Grangemouth refining and petrochemical complex and the area around it.

INEOS Upstream also signed an agreement with Reach Coal Seam Gas Limited (Reach CSG) to acquire an 80% 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.

Last year, the British Geological Survey identified “significant” shale gas and oil resources in Scotland’s Central Belt – including the ‘Gulf of Gullane sweetspot’.

Ineos sign

Gary Haywood, Chief Executive, INEOS Upstream, said: There is incredible potential to provide the UK with greater energy security, growth and jobs, and help the UK’s chemical and energy-intensive UK manufacturing industry to succeed, worldwide.

“INEOS is one of the UKs largest manufacturing businesses. It employs 4,000 people in the UK across seven sites – including the Grangemouth petro-chemicals plant.  It can use shale gas at its manufacturing sites as a feedstock or energy source.

The company also owns land, pipelines and storage in some of the key areas being explored in the UK.

“All that, coupled with INEOS’ clear manufacturing excellence, strong safety focus and good relationships with the communities in which it operates, means that INEOS Upstream brings something unique to this emerging industry.

“People want secure, competitive and environmentally sound energy options, and we believe that if they had all the facts around on-shore shale gas production, then they would be supportive.

“For many years the UK has had access to supplies of natural gas from the North Sea which has provided competitively priced energy. As conventional reserves have declined, the UK has increasingly depended upon imports with ever-greater volumes of gas being sourced from overseas”.

The British Government has created an Office of Unconventional Gas and Oil to promote the safe, responsible and environmentally-sound recovery of the UK’s shale gas and oil resources, and has promised tax incentives to encourage investment.

Haywood added: “The Government has recognised that shale gas has the potential to provide the UK with greater energy security, growth and jobs, and help the UK’s chemical and energy-intensive UK manufacturing industry to succeed.

“The UK is estimated to contain vast and untapped reserves of shale gas. The question is whether the gas can be extracted economically. Part of the INEOS team brief is to study UK geology to identify the most prospective areas for economic production.

  Of course, economic production of shale gas will also require the right surface conditions, including available land, and the required infrastructure.”

The team has also been working with other chemical companies, energy-intensive users, and shale gas production companies to decide how best to communicate to a now sceptical public that shale gas can be extracted in a safe and environmentally-sound way.

He added: “The environment at the moment is difficult. People are concerned but what we need to do is to get our message out to people, to balance those messages of concern, which can sometimes be emotional and not necessarily based on sound science or indeed knowledge of the facts.”

“We need to keep driving home the message that the chemical and energy-intensive industries in the UK need to be competitive, or they face a very bleak future. At the moment Europe is seeing increasing competition from America and the Middle East where energy and feedstocks are very low cost. We need to explain that the development of our shale gas resource is one way that we can help here.”

INEOS can use shale gas as a feedstock or energy source for its ethylene crackers but it also owns land, pipelines and storage in some of the key areas being explored in the UK. 

Haywood also said:All that, coupled with INEOS’ clear manufacturing excellence, strong safety focus and good relationships with the communities in which it operates, means that INEOS may bring something unique to this emerging industry.

So INEOS may ultimately opt to drill for shale gas itself.”

In addition, INEOS has bought in substantial new oil exploration experience into the team to help.  Tom Pickering has 10 years’ experience in on-shore gas exploration and production in Europe, and has also applied for – and successfully obtained – the largest number of UK onshore licences of any applicant.

Gareth Beamish has 30 years’ experience as a geoscientist with major companies such as ExxonMobil and BG Group, including five years’ experience in shale gas exploration globally.

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