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Ineos joins search for shale gas in Scotland


Post Date: 21 Aug 2014    Viewed: 295

Ineos has bought rights to explore for shale gas in the area surrounding its Grangemouth refinery complex in Scotland, in the petrochemicals giant's debut move into the fracking industry.

The company, which requires gas and gas by-products to run the plant, said on Monday that it had bought a 51pc stake in the shale section of the PEDL 133 licence area from BG Group for an undisclosed sum.

The licence covers 127 square miles in the Midland Valley, spanning the Firth of Forth and including Grangemouth, Falkirk and much of Stirling.

The remaining 49pc of the shale section is owned by Dart Energy, which is in the process of being taken over by fracking firm IGas Energy.

No shale gas exploration has so far taken place in the area, but Dart estimates it could contain 4.4 trillion cubic feet (tcf) of gas. If 10pc were recoverable, estimates suggest it could provide enough gas to meet Scotland's needs for more than a year.

However plans to produce another type of gas, coal bed methane, in the area have already proved highly controversial.

Ineos, one of the world's biggest chemicals firms, said it intended to become "a major player" in the onshore gas production sector in the UK and was "one of very few businesses that can use shale gas as both a fuel and a petrochemical feedstock".

The company has been a vocal supporter of the need for shale gas exploration in the UK after the decline in natural gas production from the North Sea left it struggling to secure supplies of ethane - a by-product of natural gas - as a feedstock for the Grangemouth petrochemicals site, pushing it to the verge of closure last year.

The plant was saved after Ineos decided to press ahead with building a $600m project to build an import terminal at Grangemouth to bring in cheap ethane produced from shale gas in the US.

But it had made no secret of its desire to help push shale gas development in the UK and has been eyeing options for direct involvement in recent months.

Gary Haywood, chief executive of Ineos Upstream, said the deal to acquire exploration rights was "a logical next step" for the company.

“Over the last year Ineos Upstream has been drawing together a team of experts in the sector, including a number of leading shale exploration and development specialists from the US. This expertise gives us the perfect platform to move into onshore exploration," he said.

Dart's estimates of gas in the ground in the licence area come from an assessment by Netherland, Sewell and Associates Inc.

A separate study of a wider area of Scotland's central belt by the British Geological Survey in June estimated there could be 80 tcf of gas and 6bn barrels of oil. Michael Fallon, the then-energy minister, said he expected to see "strong interest" in exploring in the area.

Dart retains 100pc of the rights to gas in shallower, non-shale sections of rock in PEDL 133, where its plans to extract coal bed methane are subject of an ongoing planning inquiry.

Fergus Ewing, Scotland's energy minister, has struck a cautious note on shale gas exploration to date and last week said he would oppose Westminster plans to strip homeowners of the right to block fracking beneath their land, saying it should be a decision for Holyrood.

He told the BBC: "Simply proceeding by threatening to remove people's rights without any consultation with the people of Scotland is quite simply wrong.

"We are taking a cautious approach yes, we are taking an evidence based approach. We are looking at matters further and if we decide that it may provide opportunities for Scotland, then perhaps it should be done in a controlled considered way, in appropriate parts of Scotland." 


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