INEOS chief warns Scot-Govt. against scuttling HMS Scottish Shale

DECC graphic on shale well depth

EXCLUSIVE report By SCOTTISH ENERGY NEWS 

Even IF the next Scottish Government after the May elections (which all the polls indicate will be a historic and record ‘three-in-a-row’ shoe-in for the SNP) lifts the moratorium on unconventional, onshore oil and gas, this Scottish energy sector will have missed the economic boat.

By then, it’ll be too late. The Good Ship Shale will have sailed – and Scotland will be left (yet again) relying on experts and their technology developed overseas and/or in England to explore the huge resources beneath our feet.

And even if the next Scottish Government does lift the moratorium and plays ‘employment catch-up’, the high-value jobs will not be based in Scotland…

At the Scottish Energy Association conference, some speakers commented on ‘The Lament for Longannet’ – which sounds like the title of a Rabbie Burns poem, or possibly a traditional Scottish country dance.

It is, of course, a feeling of ‘how did we get here?’ on the closure this week of the Scottish Power coal-fired power station, which leaves Scotland largely reliant on Scottish nuclear power and (onshore) wind turbines for most of its electricity.

Will the Scottish Government moratorium turn into a Lament for Grangemouth (where INEOS’s petro-chem refinery is running at 40% capacity because it can’t get enough Scottish gas) and a still-born Scottish shale energy sector?

These are the key points in the following speech (published here in full) by Tom Pickering, Operations Director, INEOS Shale, at last week’s excellent Power Scotland Conference held in Glasgow by the Scottish Energy Association.

Pickering was speaking on the theme of ‘the future’. He and INEOS clearly believe – based on publicly-available, robust, independent and scientific evidence – that shale energy is part of Scotland’s future.

 

Tom Pickering, INEOS Upstream Director
Tom Pickering, INEOS Upstream Director

 

By TOM PICKERING

Good afternoon Ladies and Gentlemen,

The title of this section of the day is “Major Projects: Where are we now?” and my contribution to the section is shale.

In Scotland thanks to the moratorium imposed by the Scottish Government we are nowhere.

All we know is that there is a potential gas resource in the shale layer of the Midland Valley / Central Belt of Scotland.We don’t know if that potential gas resource can be produced commercially.

We could, under the moratorium undertake seismic data acquisition to understand in more detail the shale layer and the faulting system in the area. But we haven’t.

We could, under the moratorium drill a small number of shale gas exploration wells to take core samples from the rock. But we haven’t.

The Scottish Government has said that during the moratorium the industry can undertake seismic acquisition and drill test bores for the purposes of data acquisition, activities we would undertake as a matter of course if there were a clear route to gas production if it proved viable.

While we are prepared to take the financial risk of technical failure INEOS is NOT prepared to spend capital where the greater risk is Government blocking a route to eventual commercialisation.

What we do know is that despite having the engineering, academic and scientific capability within Scotland, the likely focus now for the shale gas service industry, which is where the jobs will be, is going to be in the North of England.

In my view speaking as a Scot who wants his children to have a future in a vibrant, industrious and prosperous Scotland that is a massive opportunity lost.

Even if it turns out that extracting gas from the shale layer in Scotland is not commercially viable – and that is a potential outcome – the service sector would have had the chance to get established within Scotland and pretty soon would be exporting its skills to England and Europe.

The moratorium means that is not now going to happen.

What we did do, even though the moratorium was in place, is go out to the communities in our licence areas in Scotland and through town hall meetings, local exhibitions and even taking our exhibition to the SNP conference in Aberdeen, plus numerous events arranged by other organisations and groups, we simply introduced ourselves and spoke openly about gas, the opportunities with shale gas, what is involved in its extraction, the risks and how we mitigate them.

We provided both online and in hard copy, information brochures covering issues surrounding shale gas extraction. Our website also has a series of short informational films on shale gas too.

We also listened very carefully to the communities to understand the real issues that concerned them.

Our conversations covered the usual range of issues that the public were or had heard they should be concerned about: chemicals used in fracking, aquifer protection, waste storage, treatment and disposal, truck movements, methane leakage, renewables as an alternative, climate change, industrialisation of the countryside, existing mineworkings, subsidence, residual liabilities, fracture system, earthquakes and resourcing within regulatory bodies…

What really struck home was that once these concerns were discussed and placed in context many of the individuals we spoke to at least to some degree were reassured.

Context is extremely important when talking to the public and I find our opponents routinely avoid it.


SEA logoAn example: A professor who is regularly against us, was telling the audience at a public meeting how we would use biocides as one of the fracking chemicals and strongly implied this would somehow damage public health. A member of the audience in high dudgeon said he hadn’t heard of these scary sounding biocides before and wanted to know what they were. The professor without any trace of irony explained that it’s a chemical used, among other things. in a spray to clean your shower. “Doesn’t seem so scary now,” muttered another audience member.

Don’t get me wrong there is still a vocal section of the community that is against us whatever we say, however we will continue to talk to anyone who will listen and make our case and hopefully, one day, we will be allowed to demonstrate our operations and capabilities.

In general terms I reckon that around 20% of those who came to our exhibitions are absolutely against us, 60% are in the “give me information and I’ll make my own mind up” bracket with the other 20% saying get on with it now.

INEOS has invested over £1 billion in its Grangemouth petrochemical plant over the last 10 years and is investing heavily right now in building import and storage facilities to allow it to take ethane all the way from the shale gas fields of America.

In fact, just yesterday the first shipment of ethane from shale gas departed the US on one of eight ships specially designed and built for INEOS. That cargo is bound for a facility at Rafnes in Norway, and first shipments are expected at the Grangemouth facility when it is complete later this year.

Make no mistake; Scotland needs gas for energy, for industry and for cooking and heating in our homes.

Our Grangemouth plant is currently running at 40% capacity due to the reduction in gas available from the North Sea.

Exxon and Shell, our friends just across the Forth at Mossmorran also need gas to keep their petrochemical plant going and have recently signed a deal to take a supply from our American sourced shale gas to keep their plant in business.

Can you imagine the economic and social impact on Scotland if both Grangemouth and Mossmorran were to close due to a lack of feedstock?

So, what of the Scottish Government’s moratorium? Although we are convinced that shale gas can be extracted safely and with respect to the built and natural environment, and the Scottish Government’s own expert panel reported that it too believed it was possible, the Scottish Government decided it needed to consider the point for longer and undertake more research.

We have to respect that position and look to invest our funds elsewhere unless and until the position becomes clearer.

A very interesting poll was conducted recently by the Scottish Renewables Association and although the headline suggests otherwise, a careful read of the press release issued last week will tell you that Scottish pragmatism is alive and well:

My take from the poll result is that while 70% of those polled want to see more renewable energy such as wind, solar, wave and tidal, a direction of travel with which INEOS has no argument, renewables are a major customer for our products – made from gas – in terms of priority, the majority, 52%, actually wanted shale gas (fracking) and new nuclear prioritised.

I note there is a session later in the day where the various political parties make statements on their energy policies. I would like to take the opportunity to say a few words on that.

A populist policy is only any good while the population is unaffected by its negative consequences.

It is easy to score points on seemingly populist issues but the Party that is in Government has to face up to the realities of making decisions for the good of the nation.

If you are a party with absolutely no hope of achieving power then you can say whatever you like and the more anti capitalist and anti government you can make it sound all the better. You don’t even have to put a cost to your policies because you know they will never be tested.

However, in my view, that does not help the Scottish public or Scotland.  Sometimes the Government of the day has to rise above the noise created by a relatively small number of people and take the right decisions for the greater good.

One look at the GERS report for 2014-15 tells you that Scotland needs to do more to improve its GDP and cutting off the opportunities presented by shale gas and other major projects is not going to help that one bit.

Scotland has many natural resources and as we move to a lower carbon world there is no doubt that energy from wave, wind and the sun will be a major contributor in time but that time is decades away and gas is part of the solution to achieving that lower carbon future.

COMMENT

SEN logo Dec 2015

 

 

 

 

 

All the speaker presentations will be published this week online and available to those who attended the conference by the Scottish Energy Association (at www.WeAreSEA.com)

But, in the view of Scottish Energy News, this speech needs to be heard far and wide.

And now. And loud. And clear.

One of the major benefits of the Scottish Energy Association is that – uniquely in Scotland – it can take an independent, and non-partisan view of the major energy issues facing Scotland (and the UK where they impact on Scotland). The SEA is a broad church and reflects expert opinion from across the Scottish energy spectrum.

Scottish Energy News shares and endorses the same – inclusive-  approach as the Scottish Energy Association.

 

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