Ineos strikes new fracking deal in Scotland

THE operator of the Grangemouth site Ineos has extended its shale gas exploration licence with another deal thought to be worth tens of millions of pounds in another move by the multinational company towards fracking in Scotland.

General views of Ineos Grangemouth Oil Refinery. Picture: Greg Macvean

In August, Ineos bought a 51 per cent share of the shale section of the Petroleum Exploration and Development Licence (PEDL) in an acquisition from the BG group, that increased the likelihood of the controversial drilling technique used for extracting oil or natural gas from deep underground coming to Scotland.

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However, the company has now strengthened its potential fracking business, after buying an 80 per cent stake in a PEDL licence from Reach Coal Seam Gas Limited in a deal thought to be worth a similar amount to the previous sale of tens of millions of pounds.

Executives at Ineos said the company was now keen to “move quickly to evaluate the potential of this resource, and determine if we can economically produce gas from this area”.

The company threatened to close Grangemouth a year ago during a bitter dispute with unions over pay and conditions, as it announced a survival plan to secure the long-term future of the site that includes building a gas terminal to import ethane from America.

Scottish Green co-leader Patrick Harvie said the latest deal was a “genuine threat” to Scotland’s environment and a clear declaration of intent by the Ineos to pursue fracking operations.

Fracking is credited with transforming the prospects for the United States’ energy industry in the past decade, as the natural gas sector has collaborated with the government in improving drilling and extraction methods.

However, green campaigners have claimed that hydraulic fracturing, or fracking, can cause earthquakes, as well as creating the risk of poisoning drinking water if it becomes contaminated with the fluids used in the process and adding to pollution.

The latest licence acquired by Ineos covers 400 square kilometers of the Midland Valley of Scotland and is next to the 329 square km taken over by the firm in the last deal, which includes the Grangemouth refining and petrochemical complex and the area around it.

Several licenses lie close to Ineos production facilities in Scotland and northern England, where the British Geological Survey (BGS) has identified significant shale gas and oil resources.

INEOS upstream chief executive, Gary Haywood said the company would now examine the potential for shale gas exploration in the area, before making a decision on whether the site could be used for fracking.

He said, “I am delighted to have concluded this deal in Scotland, which is a very good fit with our existing licence interest in the adjoining PEDL 133.

“We are keen to move quickly to evaluate the potential of this resource, and determine if we can economically produce gas from this area. If we can, it will provide a local source of competitive energy and raw materials to support manufacturing jobs in Scotland.

“Our recent commitment to share the benefits of the gas production with the landowners and the community will also bring significant local benefits.”

The company said it was also now working closely with American fracking specialists Mitchell Energy, which is credited with perfecting shale gas extraction in the USA, on examining potential shale gas exploration opportunities in Scotland.

Mr Haywood said: “The former Mitchell Energy team were among the pioneers of the shale gas revolution in the US, and they bring a vast experience of successful shale gas production from various areas of the US.

“We are confident that our US team, together with our own experts, can safely and efficiently develop a successful business in Scotland, which will play a part in securing the energy supply of Scotland and the UK, and will bring significant economic benefits to the country and to the community,”

Green MSP Mr Harvie called on the Scottish government to use its planning and environmental regulations to block any fracking developments.

Powers over licensing to search for fracking are reserved to the UK government, which has heavily promoted the practice.

Mr Harvie said: “It’s a genuine threat, not just to the global environment by adding more fossil fuels that we cannot burn, but also to the local environment.

“The Scottish government should act right now to make it clear that this is not welcome.

“Scottish government ministers should take a very robust line and use their powers over planning and environmental regulations to show that fracking is unnecessary and not wanted.”