Ineos Stands by Shale Despite Price Slump
Even with many shale gas projects now on ice due to the ongoing erosion of crude prices, Ineos remains bullish.
Chairman Jim Ratcliffe told the British newspaper The Telegraph that the company aims to submit planning applications for exploration this coming spring and hopes to be well advanced with doing seismic testing to try to identify sites and will probably conduct some test drills before the end of the year.
Looking at the economics of the planned projects, Ineos director Tom Crotty told the newspaper that low oil and gas prices would not discourage the olefins and polyolefins giant, which now has the biggest shale exploration acreage of any UK player.
Carrying out fracking on an industrial scale would make shale viable even at current prices, Crotty added, while forecasting a price rebound, at least in the UK.
Ineos is currently conducting town hall discussions in an effort to warm local councils and property owners to the idea of fracking at sites across northern England.
“I think the (UK) government are absolutely committed to seeing this happen, and doing whatever needs to be done to make it happen,” Ineos director Tom Crotty said, adding: “The government has said they’re going to intervene in the planning regime, because they see that’s been holding things up.”
Late last year, in part at Ineos’ urging, the government said it would fast-track applications for shale gas exploration and development.
Key tests of the government’s approach are said to include whether to call in Third Energy’s delayed fracking application in North Yorkshire and reverse the Lancashire council’s rejection last year of Australian-based drilling company Cuadrilla’s plans to frack two sites.
Cuadrilla’s appeal will be heard at a public inquiry next month. The drilling company’s CEO, Francis Egan, said nine of its 35 employees had been laid off after the decision. Drilling contractor PR Marriott laid off its entire 36-member drilling team, due in part to the lack of shale gas work elsewhere.
“I’m very confident we have got a strong case,” Egan said, commenting on the upcoming inquiry.
While there is no fixed timetable for a decision, Egan has told UK media that Cuadrilla hopes to receive a thumbs up by summer, thanks to the government throwing its weight behind the project. He said drilling of an existing well at Kirby Misperton in North Yorkshire could start by the end of the year. The project is being financed by Barclay’s Bank.
Some 4,500 square miles of new shale exploration licenses were awarded by the UK government in December 2015, with Ineos the biggest winner. Altogether, the companies’ awarded licenses are thought to have plans to drill up to 68 wells over the next five years and to frack at least 14 of them.
Some believe the figures are unrealistic, as UK gas prices have fallen by a third over the past year and are now at six-year lows. Hardly an encouraging backdrop for a shale gas revolution made in UK.