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News Extra: INEOS imports first US shale gas shipment into Europe

06 April 2016

In late March, the INEOS petrochemical plant at Rafnes in Norway received a shipment of 27,500m3 of US shale gas, offloaded from the world’s largest LNG multi-gas carrier, the INEOS Intrepid, which had earlier sailed from the Markus Hook terminal near Philadelphia. This is the first time that US shale gas has ever been shipped to Europe and represents the culmination of a five-year investment programme

The INEOS plant at Rafnes - Image: INEOS
The INEOS plant at Rafnes - Image: INEOS

Jim Ratcliffe, the chairman and founder of INEOS, said shale gas economics had revitalised US manufacturing and as a result of the group’s efforts would now do the same in Europe.

The INEOS Intrepid is one of four specially designed Dragon class ships that will form part of a fleet of eight of the world’s largest ethane-capable carriers. The vessels will create a ‘virtual pipeline’ across the Atlantic, linking the new 300 mile Mariner East pipeline from the Marcellus shale in Western Pennsylvania to the Markus Hook deep water terminal near Philadelphia, with new export facilities and storage tanks in Norway and the UK.

To receive the gas, INEOS has built the largest two ethane gas storage tanks in Europe at Rafnes in Norway and Grangemouth in Scotland. The ethane will be used in the group’s two gas crackers at those sites both as fuel and as feedstock. It is expected that shipments to Grangemouth will start in the second half of 2016.

Ethane gas is a vital raw material needed to produce ethylene, which itself is used in the manufacture of a broad range of products exported across the world. Access to ethane from shale production will provide sufficient raw material to make ethylene at a number of sites across the continent. It also provides a relatively low-cost fuel to power energy-intensive refineries and petrochemical plants.

Sunoco’s Mariner East Pipeline has the capacity to transport 70,000 barrels of natural gas liquids per day. Marcus Hook is an 800 acre site on the banks of the Delaware River, an oil and gas processing site since 1902 and latterly a refinery which shut down in 2012. New dock facilities and storage tanks have been built to accommodate and load the INEOS Dragon ships.

The newly-built ethane storage tank at Grangemouth can store 33,000 tonnes of liquid gas, which will be piped from new offloading facilities on the Firth of Forth. INEOS will invest £450 million in the new import and storage facilities at the site, which it says is the most significant investment in UK petrochemical manufacturing in recent times.

The Rafnes ethane tank can store 19,000 tonnes of liquefied gas, with total storage at the site up to 30,000 tonnes. New pipelines and processing plants have been built here as well.
INEOS will use the US shale gas to complement the reducing gas feed from the North Sea, and will also supply other companies’ European refineries and chemical plants. In November 2015, the group signed a long-term agreement to provide the Fife Ethylene Plant at Mossmorran in Scotland, jointly owned by Shell and ExxonMobil, with ethane.

Ratcliffe said: “We are nearing the end of a hugely ambitious project that has taken us five years. I am proud of everyone involved in it and I believe that INEOS is one of very few companies in the world that could have successfully pulled this off.”

In recent years Ratcliffe has been highly critical of successive UK Governments’ energy policies, saying they will drive up prices and make manufacturing industry unaffordable in the country. He is particularly scathing about plans to build a £18 billion nuclear plant at Hinkley Point, where a subsidy deal was agreed by ministers in 2013 to pay operator EDF three times the present wholesale price for electricity produced there.

His US shale gas import programme is partly designed to ensure the group’s extensive UK and European refining and petrochemical interests benefit from competitively-priced energy and feedstock well into the future.

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