Ineos May Apply for UK Shale Exploration License

04.08.2014 -

It looks "more or less likely" that Ineos will apply for a license to explore for shale gas in the 14th round of onshore applications launched by the UK government at the end of July, Tom Crotty, the Swiss-based group's director for Corporate Affairs and Communications and the development of business in new territories, told the newspaper The Guardian.

"Britain needs gas as part of its new energy strategy, both as a bridge to renewables and as a backup to intermittent power generation. If you have gas, why not use your own? Doing something [in the field of the extraction of UK shale gas] would be more or less likely for us, but as to exactly what we do not know yet," Tom Crotty, an Ineos director, told the Guardian.

"Clearly we need a degree of confidence that there is the gas that everyone says there is. The British Geological Survey has given its view, but we need to make our own assessments," he said.

Ineos, which has a registered office in Hampshire but its headquarters in Switzerland, needs gas as fuel for its chemical production plants at Grangemouth and Runcorn in Cheshire, and Crotty expressed frustration at the slow pace of UK shale development. He feels the industry is held back by a lack of clear communication and leadership.

The existing shale explorers "have not done a good job selling it. You have a situation here which has developed accidentally. The companies that hold licences tend to be small and under-capitalised. They think 'we need big guys to come and buy us out'," Crotty said.

Industry critics had encouraged householders to believe there would be huge disruption with hundreds of trucks and drilling rigs around for long periods of time, but the reality would be quite different, he added. "It can take only three weeks to drill a well in the US and then everything is taken off site, leaving a wellhead as small as a desktop. Visual impact is extremely small."

There has been speculation in the past that Ineos might throw its weight behind one of the existing explorers such as Cuadrilla Resources, but the chemicals group is now thinking it might "test the water" and apply for one of its own licences.

Cuadrilla's site at Balcombe in West Sussex was targeted by weeks of protests last year. Thousands of people rallied at the site, roads were blocked and protesters chained themselves to barriers.

Over the past 12 months a handful of larger companies, including Centrica, Total and GDF Suez, have joined smaller independents such as Cuadrilla, Celtique Energie and IGas Energy in taking a stake in various existing licences with shale potential.

The BGS has indicated there could be 1,300 trillion cubic feet of shale gas in the north of England alone, but how much of this could be extracted depends on a range of issues, not least cost. So far only a handful of exploration wells have been drilled and no production has taken place yet.

British ministers are keen to exploit any resources the country has at a time when North Sea supplies are running down fast. The successful exploitation of shale in North America has sent the price of natural gas spinning downwards and triggered a resurgence in lower-cost manufacturing of chemicals and other products.

Ineos has tied up a series of deals with US suppliers and ordered special ships to be built in China to transport ethane. The company has recently obtained a £230 million loan guarantee from the government to help to import and store ethane at Grangemouth, which it threatened to close last year but changed its mind when the workforce accepted new terms and conditions.

Ineos has hired a team of shale gase experts, and the company is also busy investing at Grangemouth to handle large quantities of ethane gas derived from shale in North America.