Ineos Ships First Shale Gas to Europe

11.03.2016 -

Ineos has launched the first shipment of shale gas-derived ethane from the US to Europe.

The ship Ineos Intrepid, said to be the world’s largest LNG multi-gas carrier, left the Marcus Hook terminal near Philadelphia on Mar. 9 with 27,500m3 of the liquefied product on board, bound for the Swiss-based company’s new terminal at Rafnes, Norway.

The vessel is one of four specially designed dragon-class ships Ineos has chartered from Danish operator Evergas long-term to create what it calls “a virtual pipeline across the Atlantic.” The gas, prepared for shipping by Sunoco Logistics Partners, originates from the Marcellus shale basin in western Pennsylvania. For the 9-to-10-day, 3,800-mile, journey the ethane was cooled to -90oC.

This is not only the first shipment for Ineos, the culmination of a long-term investment by the chemical producer, but also the first import of US shale-derived product into Europe. The company will use the ethane in its two gas crackers at Rafnes and Grangemouth, both as a fuel and as a feedstock. It will also supply other UK companies’cracker operators via pipeline.

Ineos will land the ethane and store it in two specially built tanks. Along with the tank at Rafnes, equipped to hold 19,000 of liquid gas, another facility is being put into place at Grangemouth, Scotland, where the first shipments are expected to begin later this year.

Financed in part with support from the UK and Scottish government the Scottish tank with a capacity of 33,000 t is nearly twice the size of its Norwegian counterpart. In announcing the investment, Ineos chairman and founder Jim Ratcliffe said it was part of a £450 million “rescue package” that would allow Grangemouth to “once more compete globally.”

While Ineos drew up the import plans before oil and gases prices dropped dramatically, and some have questioned the economics under current conditions, the company’s executives have continued to defend the ethane shipping project as well as fracking in the UK, especially as North Sea reserves are dwindling. Ineos is now one of the largest exploration license holders in the country, controlling nearly 1 million acres of potential shale gas reserves.

Earlier this year, Ineos said it would begin submitting planning applications for shale gas exploration this spring. Fracking is massively unpopular across the UK especially in Scotland and northern England. The British government, however, is eager for drilling to begin, as it hopes shale will lead to lower energy prices as it initially did in the US.

The government already had launched a trial balloon for its intention to bypass local councils opposed to fracking before a letter dating from July 2015 was leaked to environmentalists last week, confirming the strategy.

In the letter – an official report to chancellor of the exchequer George Osborne – a task force comprised of the secretaries of state for energy, local government and environment pointed to the need to overcome public opposition as the biggest challenge to a national shale gas exploitation plan, apart from geology and investment cost.

If improved communication and exploratory wells drilled to demonstrate the technology’s safety are not sufficient to sway public opinion, the task force said the government will need to declare fracking wells as Nationally Significant Infrastructure. This would allow national planning inspectors, rather than local authorities, to give the green light for drilling permits.