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Grangemouth plant future depends on UK shale gas industry - INEOS

10 February 2015

The Grangemouth petrochemical plant in Scotland is unlikely to have a long-term future unless a UK shale gas industry can develop, its owner has warned. Chemicals giant INEOS wants to use shale gas as a raw material for the plant and has bought licences for gas exploration in central Scotland. However, the Scottish government imposed a moratorium on the fracking technique used to extract the gas earlier this month.

Grangemouth in winter - Shutterstock
Grangemouth in winter - Shutterstock

INEOS has already invested in a project to import cheap shale gas from the USA but the group's Upstream chairman Gary Haywood said buying in the gas from abroad was not a long-term solution. Speaking at a conference in Edinburgh on February 10, he said it would be feasible to get a shale industry up and running in the UK "within three to five years".

He said: "If you look forward five years, it is possible we could be producing gas from that point onwards. That would mean that we have some time to develop the resource and replace what we get from the US. Can we do that efficiently enough to make Grangemouth make sense in the future? That is a real challenge."

INEOS has bought licences for shale gas exploration across 1,125 sq km of land in central Scotland, but the Scottish government moratorium has left a question mark over the future of the industry locally. When asked if the plant would have a future without an indigenous supply of gas, Mr Haywood said it would be "very difficult".

He said: "When you are shipping in material of that nature you are always at a disadvantage.
"It is a very special situation at the moment, with ethane being available in the US at very low prices, because of the rapid increase in production and the lack of demand in the US. That has meant we have been able to get that ethane at very, very cheap prices, relatively speaking. We can't see that going on. Unless we can develop an indigenous source, it is unlikely that the cracker at Grangemouth has a long-term future."


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