INEOS to build £450m pipeline to pump imported US shale gas from Grangemouth to Hull

INEOS' Dragon-class shale gas supertanker MV Intrepid
INEOS’ Dragon-class shale gas supertanker MV Intrepid

INEOS has announced a multi-million pound expansion of its Hull manufacturing facility to increase production of ethyl acetate (EtAc) by 100,000 tonnes per year. It is expected that the additional capacity will be available by the end of next year. 

EtAc is in high demand for use in pharmaceuticals, cosmetics, inks and flexible packaging and the Hull plant is already at full capacity. This new investment will enable the company to continue to serve customers across Europe for many years to come.

The Hull site will also benefit from INEOS’ $1 billion decision to import US shale gas to its petro-chem refinery in Scotland. A 250-mile pipeline linking INEOS’ petrochemicals plant at Grangemouth with INEOS Oxide in Hull means the site will be able to use ethylene produced from imported US shale gas, as its main raw material. 

This will have the direct effect of exporting hundreds of potential new jobs from Scotland to Humberside.

Graham Beesley, Chief Executive, INEOS Oxide explained: We are the largest producer of EtAC in Europe and we are about to get a lot bigger. Growth in demand for our products is strong and this investment will support our customers’ needs over the long term.”  

The Hull plant was originally built with expansion in mind and so the project should be completed quickly with very good cost economics. It will also benefit from easy logistical access to Europe and the global market, supporting both import of raw material, and export of EtAc. 

While the investment secures the future of 1,400 jobs at Grangemouth  for the next 10 to 15 years, John McNally, the plant manager, said that it is “crazy” that the company has had to invest millions to import and process shale from the US when potential large-scale shale gas resources are “underneath our feet here in Grangemouth”.

INEOS has been granted petroleum exploration licences for large blocks of territory across the Central Belt – including under its Grangemouth plant – but is unable to drill wells to ascertain the volume (and thereby value) of the shale gas potential because of the ‘temporary’ moratorium’ imposed in January 2015 by the minority-led SNP Scottish government.

INEOS has built a fleet of eight new Dragon-class super-tankers to ferry shale gas from the USA to Scotland and Norway as supplies of N. Sea gas dwindle.

The availablility of low-cost, domestic shale gas energy has re-energised the economics of manufacturing in the USA.

Notwithstanding the Scottish government shale temporary moratorium, INEOS will simply sit on its DECC exploration licences until the economics of energy become even more clearly visible by Holyrood MSPs – as North Sea gas is expected to run out in 15 years’ time – and instead focus on fracking shale gas in England.

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