INEOS chief sends open letter on shale energy to Labour MSP

Gary Haywood, Chief Executive, INEOS Upstream
Gary Haywood, Chief Executive, INEOS Upstream

Claudia Beamish MSP

The Scottish Parliament

Edinburgh

 

Dear Ms. Beamish

Scottish Labour position on fossil fuels

I am the chief executive of the INEOS Shale business, a division of INEOS Upstream Limited, which holds significant shale gas prospective licence interests in the central belt of Scotland.

I was very surprised recently to read your open letter to the Scottish Government in which you make the statement;

 “For Scottish Labour, the science is clear, the last thing our planet needs is another fossil fuel.  That’s why we believe there should be no ifs, no buts, no fracking in Scotland.”

It was surprising to me because it implies that Scottish Labour is now against fossil fuel development in general.  This position would imply that you will also oppose further North Sea developments, and conventional onshore oil and gas development.

I take issue with your statement that ‘…the science is clear, the last thing our planet needs is another fossil fuel’.  The science may well be clear that we as a society need to address climate change. 

The science is also clear that natural gas as a fuel has around half the carbon intensity of coal, and in any scenario, the demand for gas over the coming decades will be substantial: 84 % of the homes in the UK are heated by gas, and the renewables capacity (and related power infrastructure capacity) does not exist today, and will not exist for decades to come, to get anywhere close to satisfying the needs of the community for warmth and power without a substantial consumption of gas. 

And of course, gas is the base raw material for production of many of the chemical, plastic and composite materials that we use every day – including in the production of renewables equipment for example.

If you believe that there is a credible way forward for our society in the near and medium term without the substantial use of gas, then I invite you to articulate what this might be. 

General statements such as ‘renewables are the future’ will not do the job – what we need is a credible and demonstrable route forward that meets the needs of our society.  Too many climate campaigners make these general statements, but offer no credible pathway to a renewable future.  They paint the decision to develop shale gas resources as a ‘fossil fuel vs renewables’ debate. This is untrue and disingenuous. 

Renewables are part of the solution

Renewables need to be a rapidly growing part of our energy mix.However, unless you intend to commit the people of Scotland to a near term future without sufficient heat and power, then we will need to use substantial amounts of gas during the period that we are developing the renewables capacity that we need. 

We also cannot replace the use of gas as a raw material in chemical production with renewables.

I have also heard the arguments that ‘we have enough gas’.  For the UK, that is simply untrue – we import over 50% of our gas usage today. 

Imports of gas are 15% more carbon intensive than locally-produced shale gas would be, due to the significant energy usage in liquefaction and transport.  Also, we continue to use increasing amounts of coal globally.  If we want to maintain the right of all the citizens of the planet to access heat and power, and we also want to manage climate change, then we need to develop renewable and nuclear technology and capacity, phase out coal usage, and cover the gap with the least carbon intensive fossil fuel – which is natural gas.

I turn now to the specific question of fracking in Scotland

Your statement above seems to be conflating two separate issues, the continued use of fossil fuels, and the method of releasing gas trapped in the shale rock via hydraulic fracturing (or ‘fracking’). 

Gas from shale rock is just the same as gas from the North Sea sandstone reservoirs; it’s only the method of extraction that is slightly different. Even then, fracking has been used extensively and safely in North Sea gas reservoirs for many years. 

So your position means you will oppose North Sea developments.

Of course, many other campaigners have taken a position against fracking on the basis of concerns aside from climate change.  These include concerns around seismicity and water contamination, for example.  In the case of other concerns, surely we should look to the evidence and the science to guide us?  That’s what we do with every other endeavour in our society, every industry in our country, and every activity that we do every day. 

We are supportive of the studies being conducted by the Scottish Government, although we have expressed our view that the timeframe assigned for the studies (until summer 2017) is excessive.  Nevertheless, at least the approach seeks to consider the impartial evidence.

It is also worth noting that mainstream scientific bodies such as the Royal Society and the Royal Academy of Engineering, having looked at shale gas extraction in the UK, have concluded that it can be done safely as long as operations are conducted properly and the industry is well regulated.  Both of these conditions can be satisfied within the UK context. 

The Scottish Government’s own scientific advisors advocated the same, as did the Royal Society of Edinburgh.  In addition, the UK offshore oil and gas industry has a long established Health and Safety culture, and the same can be expected onshore.

Economic benefits

Extracting domestic shale gas to meet our needs rather than relying on imports would have significant economic benefits for Scotland and the rest of the UK.

Shale gas extraction could replace jobs and tax revenues lost as North Sea oil production declines, and would encourage the widening of the skilled service sector, even to the extent that we might export services to other countries, just as we have in the case of the North Sea. 

If we are going to use gas for fuel and chemical production, then why rely upon foreign supplies when we can produce our own?  It is more secure, we can ensure it is done to the right standards, and we can keep jobs and prosperity here.

INEOS would value the opportunity to meet with Scottish Labour to discuss our respective views on the need for reliable supplies of gas both for energy and as a raw material to produce the chemicals that the manufacturing sector relies upon. 

We would intend to make the case for a fair hearing for shale gas development in Scotland. 

We also want to properly understand your concerns, what evidence you are relying upon in coming to your position, and what alternatives you are proposing to meet Scotland’s energy needs.

 

Yours sincerely

Gary Haywood

Chief Executive Officer

INEOS Shale

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